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On the Point

True Concern: Looking Back on TrueCar Controversy

October 22, 2013

One of John Lennon’s most relevant and thought-provoking lyrics can be found in the song “Beautiful Boy.” It goes: “Life is what happens to you while you’re busy making other plans.”

Recently, that brilliant thought resurfaced, and its deeper significance was revealed to so many of us who missed it the first time around. See, after 38 years in this business, I am amazed at the evolution of the automotive retail industry. But I’m even more astonished when I look back at all of the failed concepts and revolutionary new trends that fizzled and went nowhere.

By the time I shut down my offices in 2008 and brought the business home, we had been in huge corporate offices for more than 20 years. As I write these words, I can vividly recall standing by a dumpster overflowing with thousands of files, folders and documents we had accumulated over the years. We had filing cabinets filled with failed projects and ideas we’d pursued and invested in that were ultimately scrapped.

One of the greatest lessons I learned experientially through the years was to beware of distractions that come to you disguised as opportunities. Not a week goes by that I am not approached with money-making propositions, affiliations and referral agreements. It usually begins with someone who wants to help me make “a ton of money.” Of course, the first clue is that they themselves don’t have a ton of money.

Something always makes me a little wary when someone who doesn’t have any money wants to make me rich. My career as an industry activist and futurist, dealer advocate, professional speaker, consultant, trainer and columnist has been the most exciting ride of my life. I am damn good at what I do and I certainly have people’s attention.

Things I have written and said have brought about major changes in our business and shook some of the manufacturers to their foundations. My love for the people in our industry has forged a bond and created a loyal following. I have said things others could not. I have called out scoundrels and villains. And although people have tried, nobody could threaten me and they couldn’t buy me off at any price.

After 25 years of hard-hitting magazine articles, speeches, blogs and commentary, I can breathe easy and say I’ve made a positive difference for many. There is no end in sight. I am continually booked up for speeches, conferences and onsite training and consulting in dealerships. With more than 100,000 friends and followers actively involved with me on social media, Jim Ziegler is more plugged into what’s happening in our industry at the grassroots level than anyone I know.

Moving On
I have been writing for F&I and Showroom since 2011. There isn’t a more wonderful group of people to work with on the planet. But the magazine already has a super talented editor, Greg Arroyo, and a lineup of process and sales experts like Marv Eleazer and Cory Mosley. Even though I have a great deal of expertise in the sales and F&I process, I always felt redundant writing alongside other great talent.

A few months back, I asked about the possibility of moving my monthly column to our sister publication, Auto Dealer Monthly. My writings have always focused on industry commentary and exposé-type articles. That’s what made me famous and brought me to the dance.

So, beginning with the November issue, I will become a regularly featured columnist in Auto Dealer Monthly. I’m looking forward to the challenge and preparing to continue to do some of my best work. I promise to continue to write about relevant issues without regard to political correctness. I will call out and expose the rogue players in our industry, even when it is not always in my best personal interest. I am one of the very few nationally recognized trainers and consultants who still works in dealerships regularly. I will never lose touch as many have.

Scott Painter, TrueCar
Scott Painter, TrueCar
TrueCar Revisited
Two years ago, TrueCar was the talk of the industry. It began when the company’s CEO, Scott Painter, announced he was going to make the current dealership model obsolete. For me and many dealers, a challenge had been issued. By January 2012, there were hundreds of blogs, discussions, speeches, media articles and industry debates. I was right in the middle of it, if not leading the charge. My blogs on ADMCommunity.com and DealerElite.net generated thousands of comments by hundreds of industry people and garnered hundreds of thousands of pageviews. 

The blogs I posted were among dozens of others that sprung up on every media outlet and generated round-the-clock activity and commentary. Even so, the two main blogs I created had more commentary and activity than most of the other blogs combined.

The blogs, penned by both dealership employees and vendors, read like open discussions about TrueCar and related issues. And those who read and commented on the blogs were not decision-makers in their companies, at least from what I could tell. Most of us were protesting TrueCar’s extraction of customer data from its clients’ dealership management systems, its defaming of auto dealers in commercials and derogatory websites, Scott Painter’s relentless media appearances, in which he continued to defame auto dealers to further the company’s agenda, and, finally, our belief that TrueCar was acting illegally as a broker by pricing cars.

Whether those perceptions were accurate or not, these blogs were aimed at perceived misuse by TrueCar — and other vendors — of dealers’ reputations and proprietary data.

Simultaneously, many state dealer associations got involved. Their directors wrote letters to their members explaining that they perceived TrueCar’s business model to be illegal in their respective states. If they didn’t state outright that dealers should stop doing business with TrueCar, they certainly laid it between the lines. At the government level, it wasn’t long before TrueCar’s business model was ruled illegal in a number of states.

In every speech, every conversation and every blog, the theme was that nobody really believed anyone was going to put TrueCar out of business. That was stated over and over again. I believe the goal we all had was to cause the company to change its business model. Let me repeat, our goal was not to put TrueCar out of business.

But just as the controversy neared its boiling point, it became apparent that TrueCar might actually go out of business.

During this time, TrueCar hired a former AutoNation executive, Mike Timmons, to be what I would call vice president of damage control. The first time I met Timmons was at a party at the 2012 NADA Convention and Expo. He extended his hand to me and I slapped it away and kept on walking. But he was persistent, and eventually we talked. His message was clear: We screwed up and we realize it. He was unexpectedly honest. He told me that TrueCar was in financial trouble and couldn’t stop the bleeding under the current circumstances. Painter has admitted as much in numerous interviews since.

Timmons told me the company had formed a dealer council and that it was restructuring its business model to be more dealer-friendly without compromising consumer value and trust. There was no way I couldn’t like the guy. Here he was, baring all without the arrogance or smug superiority dealers perceived to be the company’s trademark.

Still, I personally had a problem trusting TrueCar. Some of its people had taken some really low blows at all of us over the preceding months. For the most part, I felt the bloggers, dealers and commentators had tried to play fair; at least I know I did.

Oh, don’t get me wrong. I have a powerful way with words, and I have many friends who, let’s say, mutually influence each other. There were times my friends went too far and I had to remind them we did not need to be crass or vulgar. I advised them to stick to the facts and use finesse and persuasion. Even I found myself writing and rewriting some things over and over again to be sure I said exactly what I meant.

After my meeting with Timmons, I personally backed off completely. I adopted a sort of wait-and-see approach. The blogs cooled off before going dark. In the months that followed, TrueCar did indeed make major changes to its business model. It was no longer a reverse auction that forced dealers to sell cars at huge losses. TrueCar’s pricing, although still the lowest by far, became fair to retailers and consumers.

Later that year, Painter actually flew to Atlanta and invited me and my wife, Debbie, to have dinner with him at a local Cajun restaurant I picked out. Timmons was also there to meet with us. But get this: Painter flew to Atlanta to spend a few hours with us before hopping back on plane to fly back to California. That’s 10 hours or more of travel time.

Painter wanted to show me the new business model his firm rolled out. He also wanted to show me his latest TV ad. I wasn’t about to endorse him or the changes he made. Being a dealer advocate and industry activist, I never endorse a vendor, even the ones I really, really like. But I have to say, despite starting with an aura of tension and mistrust, I found that I really like Scott Painter. We will never agree on just about anything, but the guy has the same belief and conviction in his causes as I do in mine.

I was smirking at the very fact that I had this sprout-eating, preppy-ass Californian sitting in a Cajun restaurant eating spicy deep-fried alligator tails. It was all in good humor. I even took a photo of Scott Painter wearing my “Alpha Dawg” hat.

I have since stated publicly, on many occasions, that I am OK with TrueCar’s current business model. It has rebounded from the edge of the cliff and its business is now thriving. That’s great for consumers and retailers alike. Are they perfect? No. They still have issues with dealers, but they are ready to listen and work through them. In the past, that was not the case. With that said, if I were a dealer myself, chances are I’d do business with them.

Now, I never did accept a position on TrueCar’s dealer council, but Painter and Timmons have contacted me on occasion to discuss how to improve the company’s dealer relations. Timmons discussed with me the possibility of TrueCar sponsoring a cocktail reception at one of my Internet Battle Plan conferences. I turned his offer down several times, but I decided to let them sponsor a reception at my Las Vegas event in August.

The FTC Cometh
Shortly before my recent knee-replacement surgery, I received a special gift from Mike Timmons. It was a beautifully crafted, ebony-wood walking cane — a very special gift. Scott Painter also called and wished me a speedy recovery.

Between the good wishes and the surgery, I received a registered letter from the Federal Trade Commission (FTC). It informed me that I was involved in an investigation concerning firms in the retail automobile industry that had purportedly agreed to refuse to deal with TrueCar. The letter warned me not to destroy any evidence or e-mails pertaining to this case.

Within a few days, the industry was buzzing with the news. I’m still receiving calls every day from dealers and others who want to know more about it. It seems they are sending out the same letter to everyone (or almost everyone) who participated in the blogs and forums. The dealer associations who admonished their members about TrueCar and even the dealers whose employees commented on it have received one.

In interviews, Painter emphatically denied that TrueCar had anything to do with filing any complaints with the FTC. I think he said something to the effect of pursuing a complaint would be sort of like sending in reinforcements after the war is over. Many people in the business are telling me they don’t believe him. They think this is a blatant, back-door ambush by a company seeking revenge on an industry that spoke out against it.

I believe Painter is sincere. I’ve seen them make too many strides and good-faith gestures. I walked away from every conversation I’ve had with the man believing him to be sincere. I don’t always like the way he thinks, but I do not believe TrueCar is behind this. If I am proven wrong, it would greatly disturb me.

As far as TrueCar goes, let’s face it, it has too much positive momentum with dealers to want all of this regurgitated and dragged out again. Besides, we have all moved on.

On the other hand, I think it’s important to know exactly who did initiate this investigation. It might be nothing more than the FTC doing some due diligence. But what prompted it? It seems to me the agency would have been more interested in the data-abuse issues — real or perceived — and investigated that. There are a lot of vendors doing some very kinky things with consumer-identifiable data they’re taking out of your DMS. So it’s puzzling to me that the FTC would investigate the whistleblowers. There have to be some First Amendment issues at play here. Who knows?

The long and the short of it is that none of us really knows yet where this is headed or what the FTC is trying to accomplish. Maybe the agency’s intent will be much clearer by the time this column is published.

The conversation I had with the FTC attorney who wrote my letter was civil and polite, although I didn’t really learn a lot from it. I got the impression that perhaps they perceived some sort of large, organized effort by a consortium of anarchists. I assured the attorney that my company and entire staff is just me, Debbie and our dog operating out of our basement. I’m not even sure if my shredding machine works. I’ve been meaning to take it back to Office Depot.
Until next time, keep those letters and e-mails coming, and don’t forget to check out the November edition of Auto Dealer Monthly. 

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

Comments

  1. 1. Timothy Crabb [ November 07, 2013 @ 01:56PM ]

    I have to say after using TrueCar for year we stopped. The new policy changes have made it seem as they are the only lead source on the plant that can provide a valid lead. Before you could fight the fact that the customer came from another source now you pay the price. $299 for new $399 for used. Oh and if they feel like you are due any credit it will only ever be $100. They stated in the new dealer agreement that you have 7 days from website or OEM leads if there lead comes in first up to 90 days after they can bill you. If your website or OEM comes in first you must sell it in 7 days or they bill you full price. So what they are saying now is if you get a lead from them they are the only reason you sold the car. Im out on a company that feels they are the once in power at my store. As far as I can see other dealers need to drop them too or they will think everything they are doing it right when in fact it is not.

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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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