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On the Point

Battle Lines Drawn

‘Da Man’ has his game face on and issues a warning to all vendors requiring DMS connections. He also has a message to dealers: ‘Let’s go to war.’

April 15, 2013

‘Da Man’ admits the Google Car experiment has him concerned. Pictured above is Google’s executive team, including Eric Schmidt, executive chairman, Larry Page, CEO, and Sergey Brin, co-founder.
‘Da Man’ admits the Google Car experiment has him concerned. Pictured above is Google’s executive team, including Eric Schmidt, executive chairman, Larry Page, CEO, and Sergey Brin, co-founder.

There’s nothing the human race loves more than a war of epic proportions. Whether the battle is rooted in the struggle of good vs. evil, or the need to save the world from total destruction, we are drawn to it like moths to a flame.

There’s nothing better than when the human race defeats the aliens bent on total annihilation of our species. Of course that ain’t gonna happen as long as we have Will Smith and Jeff Goldblum willing to fly a nuclear weapon into the mother ship. 

In the real world, there was Y2K, the Mayan calendar and Judgment Day, as predicted by Family Radio President Harold Camping. These events never came to pass, and business as usual prevailed.

Somewhere around 1998, technology evangelist Scott Painter had a startup company called CarsDirect. It was supposed to signal the end of the world as we know it — the car dealers apocalypse, if you will. Because the vendor was going to sell cars directly to the public, which meant the death of the car salesman, too.

Well, after several more false starts and forecast revisions, Painter came up with TrueCar. He also announced a new prediction about the end of our business as we know it: He was going to drive down prices to unconscionable lows and losses while charging the dealers a flat fee for each bad deal he served us.

Legislators, dealer associations and guerrilla bloggers (including the Alpha Dawg Tribe) struck back. Once the smoke cleared, TrueCar retreated and revised its business plan to something that appears more dealer-friendly. The company says its changed. But has it really?

Game On
Imagine my disgust when I saw the announcement that Allstate Insurance is now selling cars. And guess who’s powering this venture? You guessed it: TrueCar.  

The Allstate website boasts an average savings of $2,678 off MSRP from the selling dealer. Of course, they do disclose that these estimated prices and savings are not currently available in Arkansas, Colorado, Kansas, Maryland, Nebraska, Oregon, Texas, Virginia and Washington. Too bad these states have strict laws and strong dealer associations. In part, the Allstate disclaimer says the company does not endorse or take any responsibility for TrueCar or any other third-party websites.

Haven’t we all had enough of this? The biggest single thing that jumps out at me is the statement repeated over and over again by a chorus of renegade vendors to consumers: “Find out what others paid.” How do they know what others paid? Because they stole the data from our dealer management systems (DMS).

And it’s not just TrueCar, either; it’s almost every vendor you do business with. With a few exceptions, almost everybody who has access to your DMS is stealing your customers’ information, repackaging, repurposing, and reselling it to others.

During a dinner conversation, Painter told me TrueCar gets very little information from the dealers’ DMS. That is true, but it does buy that information from somebody — and that somebody did get information from the dealers’ computers.

Even manufacturers are hiring companies that scrape dealers’ websites, and they track your customers with cookies they planted in their browsers when they visited your website. Then they remarket directly to your customers, not in your best interest, maybe not even on behalf of your dealership. There’s even a strong possibility they might be sending your customers to competitors or lead providers.

‘Da Man’ wasn’t happy to learn that TrueCar is driving a new car-buying site for Allstate, which officials say has been live since February 2011.
‘Da Man’ wasn’t happy to learn that TrueCar is driving a new car-buying site for Allstate, which officials say has been live since February 2011.

Of course, these companies will argue they can’t identify your customers from the data they pull. But what they do have is their IP addresses, which are identifiable. When the customer eventually fills out a form, they then have their name, contact info and personal information. So don’t buy into that crap.

See, what these companies are taking from your DMS is transactional data. Coupled with personally identifiable data, that’s a powerful marketing and remarketing tool. They then aggregate the data, sometimes with their own sister companies. Then they mix everything they know about your customers to get a complete picture of who they are, what they’re interested in, their income, their finances, what they paid for the car and their financial and insurance arrangements. This is a huge liability for the dealer. By law, you’re supposed to protect this information.

Vendors Gone Wild
J.D. Power and Associates (which originally supplied data to TrueCar), Edmunds and the companies in the AutoTrader Group are devouring vast amounts of dealership data. So, again, why do you have to give these people unspecified and unlimited access to your DMS? Well, I got my hands on what I was told is an authentic excerpt from VinSolutions’ dealer agreement. The company, as you know, is one of the AutoTrader Group Companies — along with Kelley Blue Book, vAuto, HomeNet Automotive and CDM. My darn editor wouldn’t let me publish it, but please send me an e-mail if you’d like to see what I have.

Since I can’t show the contract language, I’ll have to tell you what’s in it. And what’s in it, at least from what I read, are statements that say the company has the right to share your data with their other affiliate companies. It even states that the company can aggregate your data with its affiliates’ data — collected from who knows where — and that VinSolutions retains all rights, title and interest to all of your inventory and transactional data.

Are we to assume these companies share your data with each other and merge, purge, aggregate and repurpose it? Then what do they do with it? Does any of it end up in your competitors’ showrooms?

Well, I recently caught a Kelley Blue Book commercial. In it, the company tells consumers it can find out what other car buyers paid for their car. I just about fell out of my seat when I heard that.

Yup, Kelley Blue Book is now pricing cars for consumers. I even gave the site’s new pricing feature a try and specked out a 2013 Buick Enclave. Here’s what Kelley Blue Book told me: The car I specked out had an MSRP of $41,170. The dealer invoice was $39,028. The site’s fair market price was $38,511. Of course, that’s after the $1,000 rebate. So, with the customer keeping the rebate, it is either $500 or $1,500 under invoice, depending on how you look at it.

By the way, I erased all of the cookies out of my browser the moment I left the Kelley Blue Book website.

Now, I bet you’re wondering where KBB got all of this so-called “fair pricing” information. I’m betting it came from the very dealer they referred me to for the vehicle purchase, who paid some other AutoTrader affiliate company for services.

Ziegler questions why the AutoTrader Group and its affiliate companies require that dealers provide access to their DMS.
Ziegler questions why the AutoTrader Group and its affiliate companies require that dealers provide access to their DMS.

So, are we paying vendors to take our information to serve up deals way under invoice, charge us for the privilege and take ownership of our data? I know for a fact Edmunds.com has told dealers it will not do business without access to the dealers’ DMS. I just don’t understand why.

Don’t Look Now
Just when you probably thought it couldn’t get any worse, Google jumps into the game. They’ve already beta-tested Google Cars in the San Francisco Bay area. I can’t say much intelligently about the program (at least not yet), so I will speculate based on feelings and intuition: I think this is probably going to suck.

Our industry is now being invaded by the mother of all data aggregators. It has infinite possibilities when it comes to ways to cheat, and no one would be aware when it did.

You can’t tell me that Google doesn’t know virtually everything about everybody. Where do most customers shop?

If AutoTrader is the big kid on the block and nobody can take them on, the new kid on the block has a reputation and a brand that resonates with our customers. I bet TrueCar, Edmunds, Kelley Blue Book and even Cars.com are cringing just a bit — maybe a lot.

So, where is the National Automobile Dealers Association? The NADA, along with state associations and the American International Automobile Dealers Association, are very important to the dealers’ best interests. You need to be a member of your dealer organizations, and you need to be an activist and contribute money, as well as your time and support.

I am disgusted that so many dealers have stopped participating in the conventions and 20 Groups. You don’t make it better or stronger by walking away. So, get in there and let your association leaders know you will support them.

It is time for the NADA to get involved. This is a serious threat.

Carfax Investigated
Back in January, I received a call from Joseph Rhee, a producer for ABC’s “20/20.” He had read some of my blogs about Carfax and wanted me to appear on the show as an expert. He was looking to air an exposé about Carfax from a dealer and consumer perspective, so I showed him some consumer-complaint websites and supplied him with other information.

Unfortunately, at the last minute, I was dropped from the show, which aired on March 17. Rhee said he had decided not to pursue the dealer angle at this time.

The show that aired was damaging to Carfax. But over the course of my conversations with Rhee, I discovered that he thought dealers were using Carfax in an unethical way.  

He never said it outright, but I got the impression he wanted me to say something negative about the dealers. That ain’t gonna happen!

I told him no dealer I knew would ever knowingly stock a damaged car. I don’t think that’s what he wanted to hear. So be it. I wasn’t on the show, but I had a major impact in the background of the story. I’m satisfied; they did a good job with it.

On March 17, ABC’s “20/20” aired a damaging report on Carfax. One of the claims made is that AutoCheck provides more accurate reports.
On March 17, ABC’s “20/20” aired a damaging report on Carfax. One of the claims made is that AutoCheck provides more accurate reports.

One claim made in the report was that Experian Automotive’s AutoCheck is more accurate than Carfax because it uses auction reports. According to the report, frame damage missed by Carfax is often picked up by AutoCheck.

I have never favored AutoCheck over Carfax. I feel they both have inaccuracies. But this was a revelation to me. Hey, AutoCheck doesn’t slander and libel car dealers with negative advertising. And it doesn’t take it upon itself to price cars.

This isn’t the end and it isn’t over by a long shot. Unlike the initial skirmishes with TrueCar, Carfax is more entrenched and has built brand recognition. The “20/20” report exposed the truth about the company. I am talking with executives at another network about the possibility of a discussion about Carfax from another angle. You might see the Alpha Dawg take a bite out of the Fox Network yet.

So, your mission is to send this article to everyone you know. Let’s be sure all of the dealers, vendors and association executives get a copy of this from you. Smear that black stuff under your eyes, get your game face on, and let’s go to war.

No cognac this month, I am still on that diet. We’ve got the Internet Battle Plan in Detroit coming up in April, and I am still living large and loving life. Keep those e-mails, phone calls and Facebook and Twitter messages coming.

Jim Ziegler is the president of Ziegler SuperSystems Inc. E-mail him at jim.ziegler@bobit.com.

Comments

  1. 1. Bob Gault [ April 23, 2013 @ 12:30PM ]

    I am a multi-line dealer and have had many discussions with manufacturers and suppliers about our refusal to let anyone into our DMS, We had allowed this early on and my son who got his degree in Information Technology was able to find out where these "factory authorized" vendors went, and it was not where they needed to go, now we push any legitamite info the factory or vendors (v-auto) need. I would highly recommend that all dealers do this, otherwise your info is fair game to be resold to anyone.

  2. 2. David T. Gould [ April 24, 2013 @ 05:01PM ]

    Great over all view Jim. The lawsuit filed should shed more light on your (dealer's) cause... Keep up the good fight. DTG

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Author Bio

Jim Ziegler

President & CEO of Ziegler SuperSystems

Jim 'Da Man' Ziegler joined the magazine in 2011 to deliver his On-the-Point message about the car business to dealer principals and store managers. He'll offer strategy advice on everything from sales and F&I to marketing in the digital age. Catch him every month at www.fi-magazine.com.

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