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TrueCar - DealerTrack (ALG) Relationship: The words of a DealerTrack Employee

I received this email about eight hours ago from an employee of DealerTrack.  They asked me that I kept it discreet so I will not be mentioning who it was that sent this to me.  It is amazing that DealerTrack's own employees have certain opinions about DealerTrack selling ALG to TrueCar.  Does it mean that DealerTrack's own employees are against this deal too?  I know that I myself could not work for a company that would allow something like this (no matter how much money I was getting paid).  Anyway, here is the email with more inside information by someone whose name cannot be disclosed.  Friends, enjoy this as much as I did.

> So the press release reads "DealerTrack sells ALG to TrueCar."  Why would DT part ways with their most unique data brand, in an age where data rules all, you ask?  Well, actually they didn't.  In the "selling" of ALG, DT gets:  an equity stake in TrueCar, scores a seat on their board, receives a perpetual/royalty free ALG license, secures a multi year agreement to retain operating duties, and banks a very high stack of millions of dollars. What did they give up other than some future subscription revenue, of which they are going to share in anyway?
>
> This isn't a sell your dealership to AutoNation/take the money and run type of a transaction.  This is Pops handing off to Junior.  Son here's how we do it. This is nothing more than "let's just go ahead and transfer the title and put this thing in your name, wink."  DealerTrack had to have anticiapted the outcry of moving dealer data, and this was their way of staying off the battlefield.
>
> So why would TrueCar agree to such a one sided expensive deal?  Imagine all the financial and lender information that DT has access to, or the amount of data contained in the DT DMS (Arkona), imagine the number of credit applications submitted through their portal each day, the scanned deal jackets, the AAX inventory metrics, TriVin's electronic titles, etc... The amount of data is maddening, it's deafening.  But with every one of these keystrokes from  these modules and business units comes a corresponding digital imprint, an imprint that is filed and sorted, and sent to the DT data vault for future use.
>
> Welcome to the future.

> Many of us have seen A&E's Storage Wars where entrepreneurs will bid for access and ownership to the contents of storage lockers that are in default.  Invariably there is a guy in the back of the auction crowd with a funny hat that is always nodding his head and mumbling, "uh hum".  Let's call him Scott.  And Scott will do whatever it takes, at any cost, to get the keys. He just wants to go in and take a peek around.  Here's a check.
>
> And whether you think it's your data, or legally it's theirs, or you like the TrueCar business model or you don't, that's up for you to decide.  One thing is for sure, DealerTrack just made a truckload of money.

> Zig, meet Zag.

Views: 1121

Tags: alg, automotive internet sales, automotive sales, dealer etraining, dealertrack, stan sher, transparency, truecar, zag

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Comment by Stan Sher on January 4, 2012 at 8:08am

Trust me.  2% is a BS number.  I have had a chance to experience TrueCar for a full week.  They are taking over a whole market.  A dealership that gets 600 normal leads from their sources (that are not out to hurt them) now gets 1600.  1000 comes from TrueCar and they sell 30-40 cars per month out of it.  That is a 3-4% closing ratio when we should be at 10%.  I found out calling these leads that the customers are being steered in that direction.  TrueCar has done a great job getting in front of the consumers with their commercials and marketing. But when 70% of your leads are 80-120 miles away and they do not want to make the drive no matter what value you give them or how good of a closer you really are you start to really see what a horrible company TrueCar is. If you want to clutter your CRM with garbage and let your DMS be used to extract data that will be used against you then TrueCar is your solution.

TrueCar is not a friend to the industry.  TrueCar is worse then cancer.

I spoke to a BDC manager from a NY Chrysler Jeep Dodge dealership.  He called me because he was looking to contact his TrueCar rep and when he googled to get contact information he stumbled on my blogs.  He actually defended TrueCar saying that he does well with them and they are good.  When asking him how he feels about getting the runaround from leads that are 80 miles away he simply responded that he does not waste time on internet leads at all.  He follows up with them for 7 days and if nothing happens he just gives up.  He did not believe that a lead needs to be managed for 90-120 days.  I wonder what training he got.  That is not a good BDC Manager at all.  I cannot believe that dealers allow things like this to happen.

There is nothing out there that can prove that TrueCar deserves to have a place in the marketplace.  I was going to go out and see the operation for myself.  But I realized I want nothing to ever do with them after TrueCar started submitting bogus leads with my information to their own dealers.  I had 100s of dealers from NJ, PA, and even CA call me to follow up with me because they thought I was an internet lead.  These leads came from TrueCar.  A company that is supposed to be a partner in helping dealers sell more cars is not only hurting them by taking their data but it is wasting their employees time calling on bogus leads instead of focusing on the real leads that should be coming in.  Come on dealers, wake up!!! How can you let this happen?

Comment by James A. Ziegler on December 21, 2011 at 4:37pm

KANSAS AUTOMOBILE DEALERS ASSOCIATION

IMPORTANT NOTICE: Brokering Prohibition – True Car/ZAG

To: The Members of the Kansas Automobile Dealers Association

From: Don L. McNeely, President

Various models for motor vehicle sales programs have brought increased attention on marketing practices in Kansas and across the country. Commentators have most recently focused upon such programs as that offered by TrueCar/ZAG though there are many forms under which a dealer may be functioning, particularly in online arrangements. This comment will focus upon how such programs can actually unwittingly or otherwise set you up for possible violations of the Kansas Dealers and Manufacturers Licensing Act, particularly those declaring motor vehicle brokering illegal in Kansas.

It is KADA’s opinion that the manner in which programs such as that offered by the True Car program as it is currently structured and being offered in our state do in fact violate the Kansas brokering prohibition. This is particularly so as it relates to a dealership paying a direct marketing fee, which can be likened to a commission, for each vehicle sold. While it is not unlawful to pay an annual or monthly advertising or subscription fee for vehicle leads, it is a violation of the Kansas brokering law to pay a third party a fee—or other benefit--for bringing buyer and seller together.

It is our understanding that a number of Kansas franchised new car and truck dealers are currently doing business utilizing the TrueCar/Zag format. It is also our understanding that several formal complaints have been filed with the Kansas Department of Revenue’s Division of Motor Vehicles requesting an investigation of those dealers who have been identified.

As a reminder, the Kansas broker prohibition statute was enacted in 1990 and was ultimately upheld by the Kansas Supreme Court in 1992 (Blue v. McBride). K.S.A. 2010 Supp. 8-2404 (q), (r), and (u) which respectively pertain to new and used vehicle brokering describe prohibited and allowed practices and exceptions (display, advertising, soliciting and acting as a broker). These are also discussed and tempered in the McBride case to allow for the free exchange of information, but one must still keep in mind that brokering practices are squarely prohibited.

You have to pay attention to the laundry list set forth in the law. It defines a broker to be any person who, for a fee, commission, money, other thing of value, valuable consideration or benefit, either directly or indirectly, arranges or offers to arrange a transaction involving the sale of a vehicle, or is engaged in the business of (1) selling or buying vehicles for other persons as an agent, middleman or negotiator; or (2) bringing buyers and sellers of vehicles together, unless excepted. (See K.S.A. 2010 Supp. 8-2401(x).) As you can see the arrangements that are prohibited forms of brokering describe many elements of the TrueCar program which you should review carefully before engaging in such practices.

Another thing we have heard expressed about marketing arrangements are concerns related to legal issues of privacy, data use and ownership, as well as data access, particularly where a dealer has given outside access by a unrelated third party to its DMS system. The TrueCar/ZAG structure serves as a significant example of the issue. It collects transactional data from supposedly various sources to determine “the right price” to pay for a car. Vehicle pricing points aren’t necessarily the only issue, though. KADA is of the opinion that this can be very risky for TrueCar/ZAG, for consumers and for dealers. This is because the information is only as good as the data at hand and consumers may tend to rely on it as if it is gospel. When the information turns out to be inaccurate or misleading, the dealer is left holding the bag.

Additionally, it would seem this type of arrangement could also lead t

Comment by Stan Sher on December 20, 2011 at 10:24am

Slowly but surely TrueCar is getting what they deserve coming to them.

Comment by Stan Sher on December 15, 2011 at 11:46am
Comment by Stan Sher on December 15, 2011 at 8:38am

I am listening to the call with Jerry T and Scott Painter right now and it is exactly how the call went with me.  We had similar questions and the answers were exactly the same.

Comment by Keith Shetterly on December 11, 2011 at 11:51pm

See Honda Drops TrueCar! Thank you Jim, for all your leadership on this.  Mike Warwick:  Nice quote.  :)  Well done!!!

Comment by Keith Shetterly on December 11, 2011 at 9:32am

Thanks Stan--great work!  And many thanks to the TrueCar employee who came clean.  There you go.  Many of us have discussed this transaction in just that way:  When TC/Zag says it "no longer needs DMS data" what it really means is that it found replacements/augmentations from other sources.  WELL, THE DEALER SOLD THE CAR.  SO, who's data is it really?  Does it matter that they got your business information directly from you or from your cousin?  DealerTrack, you're not off the hook now.  Not any more.  I doubt any of the folks involved in this expected the power of social media.  It can topple a government.  And it can stop this, if we keep pushing.  Essentially, DealerTrack sold it's daughter into marriage.  That's something Kings used to do in order to seal covenants and treaties and alliances--which should tell you all you need to know about this deal.  DealerTrack = TrueCar/Zag.  Think about that while you're putting your deals through these systems next week . . .

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