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True Car and ZAG - Cyber Bandits or Good for the Business?

Jim Ziegler asks...

I am hearing a lot of discussion about True Car and ZAG.  I continually scratch my head and wonder if  desperate dealers are doing the marketing limbo "How Low Can You Go?" 

Are we so bad at what we do that we have to line up and pay vendors to lose money? AND, who is giving these people access to your data that is used against you? 


Who owns these companies and what might be their ulterior motive?  Sometimes I ask questions to which I already know the answer. 


Am I wrong?

What do you think... JIM







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Jim Ziegler's Guidance and Recommended Action Plan:

Ten Areas We Need to Concentrate on to Bring This Monster to It's Knees...

  1. Government investigation of ALL Data Aggregators taking consumer information from dealers' DMS. Sadly enough, dealers who do business with TrueCar are exposed to  liability charges. Cut off all access to unecessary data, no matter who takes it from the dealers DMS and make it illegal to "resell identifiable consumer data" and "transactional data".
  2. Educate Your Fellow Dealers; If anyone takes financial transactional data, they expose the dealer that allowed it to violations, especially if it is passed on to other vendors or shared.
  3. Educate Consumers to what they're doing with their information...
    a. You buy a car from a dealer, do you really want your personal information, and maybe even your financial information, passed along and sold and shared by "God knows who?"
    b. These People Charge the Dealer $300 which the dealers have to build into the deal
    c. Your Privacy and the Security of your Information could theoretically compromise your identity if you do business a company that takes data from the dealership.
  4. Educate Investors and potential investors they could possibly be mislead if anyone is telling them this is a safe investment because of all of the dealers pushing back, associations pushing back, and government regulators in many states coming after TrueCar's business model as NOT compliant, in some cases they're saying it is Not Legal.
  5. AMEX, USAA and all of their affiliates do not want the bad consumer relations this push back is creating with their members and customers.
  6. Cancel your dealership's Affilation with TrueCar. Tell people with TrueCar certificates that YOU don't honor TrueCar and you feel the company is NOT reputable. Educate consumers as to perceived data exposure if they buy from a TrueCar dealer. Make sure that each consumer knows that using TrueCar actually increases their vehicle cost by $300 to $400.
  7. Make the dealers selling at huge losses take all of those deals. Big problem right now is too many Nissan Dealers and others are taking huge losers to get the factory money. The TrueCar reverse-auction business model will continually push those numbers down until the factory money is non-existent. Consumers need to hear from many dealers, "We don't do TrueCar"
  8. Keep calling your National and State Dealer Associations demanding they get involved and stay involved... No excuses.
  9. Get the Manufacturers into the game. If GM, Ford, Toyota, and other majors change the rules about how we advertise and do business to protect the dealers, we can cut off their ability to set pricing. So keep it up at every dealer meeting. Call your Dealer Council Members and protest to your factory reps. Tell the manufacturers, if they want showroom and facility improvements, we need the ability to make fair profits.
  10. Tell everyone you know. Educate other dealers and industry people. Watch the Painter interviews... I believe this is the first time a vendor has publicly announced they intend to bring down the dealers and hijack our business, taking our profits and starving us out with our own data. Painter has said manufacturers and dealers should go bankrupt and he, in his God-like way "will control distribution..."
    When the TrueCar-Yahoo Deal kicks in we need to stand firm and "Just Say No" we don't honor TrueCar deals.

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Comment by James A. Ziegler on November 28, 2011 at 5:49am

When the car business arrives at work beginning in about fifteen minutes from now, I suspect this thread will take off with a lot of commentary... JIM


Comment by Jerry Thibeau on November 28, 2011 at 5:36am

I commented on another site and I'll just copy and past my response here as well:

You buy a baby alligator and feed it for years, then one day it decides to eat you for lunch!  It's not too late to put this beast down.  I am guessing True Car just got a fresh infusion of VC to fuel the advertising that's currently taking place.  It's only a matter of time before every customer is walking in the door with a True Car price sheet.  People love bragging to their friends about the great deal they received. 

If this beast continues to grow, I can see a day where a customer walks in and says to one of your salespeople, "I've got this True Car price sheet and ABC Motors said they would beat it by $100, what will you do?"  Where does it end?  A better scenario is when a customer walks in with a True Car price sheet and the salesperson says, "sorry, but we don't honor those, nor do any of the other dealers in town."  Kill the beast or watch our industry change dramatically for the worse.  This is going to become a game changer if it continues.

Comment by Ralph Paglia on November 27, 2011 at 11:24pm

Jim - Your questions are the right ones to ask... As of the last two months I have seen an overwhelming TV presence from TrueCar that merits investigation by dealers who want to be competitive in their market.  This almost seems like being open on Sundays.  The first dealer to do it ruins it for the rest of the automotive community until someone passes a Blue Law.

Comment by James A. Ziegler on November 27, 2011 at 3:07pm

Great start Keith... I thought i would bring this discussion to ADM because it drew nearly a hundred responses on my Facebook Page....

Comment by Keith Shetterly on November 27, 2011 at 3:04pm

I post the same as I did on Facebook when you asked this question:  I think this horse is out of the barn. The showroom in the Future by Zag is manned like a current department store: hourly employees, and the price is set by a corporate HQ. You will know your financing before you get to the showroom, and essentially THAT is what you'll price shop--since all showrooms will have the same pricing. Essentially, I've long believed that the OEMs would sell cars direct if franchise laws allowed it (Tesla is an interesting test case for that going on right now). Dell conquered its market by selling direct without the dealers that Compaq, etc. had in place. They had no investment in those bricks, and before the "Internet click" they replaced bricks with toll-free ordering. Now, all that said, do I think that is the ONLY future possible? No. However, I think the dealer associations would have to become of the strength of, say, Dealer Guilds in order to fight that future. My $.02.  And I got this link from Chad Collier, to whom I was directly replying on your Facebook thread

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