Community

Share your automotive expertise

2 Write a Blog Post

OPINION: CARFAX is extorting my dealership...

CARFAX provides stickers to place on our pre-owned vehicles. This is a shot of a sticker attached to a key cabinet in our office. We do not place these stickers on our cars, as we feel the image of the CARFOX is not consistent with BMW’s brand values.

Originally published on October 3, 2012.

 

 

Please click here for my most current CARFAX post.

Last month, after an extensive comparison of nearly 6,000 VINs, BMW of North America concluded that AutoCheck’s Vehicle History Reports were just as reliable as CARFAX reports. Finally, after years of only supporting CARFAX, BMW’s mandate for Dealers to use CarFax for Certified BMWs was over.  This meant, that as a BMW Dealer, I could now choose either CarFax or Experian’s Service (AutoCheck) as my vehicle history report provider.

So why would I want to change?

The answer is simple. Last month, I paid CARFAX $2,575.49 to provide unlimited Vehicle History Reports for my dealership. In comparison, as part of a discount agreement with BMW, AutoCheck offers their version of the same service for $1098/month – a savings of over 50% per month - and at a price that was guaranteed for at least 1 year. Suffice it to say, I was delighted by the potential savings!

So, I immediately contacted my CARFAX rep with an ultimatum – I demanded that CARFAX either price their services more competitively or consider my contract cancelled. The response I received was unconscionable - my CARFAX rep explained that the monthly price would NOT be lowered and if I chose to leave CARFAX, then my ability to compete effectively on Cars.com and AutoTrader.com would be severely impaired.

How is this possible?

Evidently, CARFAX pays AutoTrader.com and Cars.com a huge stipend to be the “sole” provider of vehicle history reports on these two marketplaces. Apparently, as part of this agreement, AutoTrader.com/Cars.com cannot display AutoCheck Reports(even if AutoCheck is the provider at the dealer’s store), but they can display CARFAX reports for CARFAX participating dealers. As my CARFAX rep explained, with the vast amount of competitor’s inventory  on AutoTrader.com/Cars.com, my decision to not show a vehicle history report (when my competitors are in fact showing these reports), would indicate to consumers that my dealership had “something to hide” and push customers away from my listings. I understand transparency and I knew she was right - I was livid.

It is my opinion, that CARFAX is using Cars.com/AutoTrader.com as means to extort dealers into paying higher fees for CARFAX’s services – all while Cars.com and AutoTrader.com receive a handsome tariff. Does this sound like an unfair, anti-competitive, or potentially illegal trade practice? I thought so.

This week, I spoke with Alex Vetter(VP of Cars.com) and Jeff Catron(Director of Dealer Strategy at AutoTrader.com). I explained to both executives, that is my opinion, that I’m currently being extorted by CARFAX. I explained that unless a fair resolution is offered, I intend to file a complaint with the FTC against all parties. They both listened to my feedback, and they said they’ll consider it closely, but they would not provide a definite decision. (Note: In my past experiences with Alex Vetter, he has always been fair and equitable in his dealings – I’m optimistic that Cars.com will protect the interests of the franchised dealer).

Why is this a big deal? Can’t you sell your inventory elsewhere?

Still today, I have a very favorable opinion of Cars.com, I receive plenty of business from the site each month. And while my opinion of AutoTrader.com is not favorable and regularly worsening(thanks to my opinion of their pre-IPO cash out), I can’t ignore that AutoTrader does in fact generate business for my dealership and still remains an online behemoth. At least as it applies to my dealership, leaving both of these sites would severely harm my effectivness in selling pre-owned cars.  Moreover, as I explained earlier, in today’s transparent and instant information environment, the used car shopper will ignore dealers that cannot quickly and easily provide history reports substantiating the condition of their vehicles - especially when other dealers do. And in fact, according to our CARFAX rep, from January 2012 to August 2012 my dealership has received 17,466 ICR’s  - or as she explained, the reports ran by consumers viewing inventory on AutoTrader.com and Cars.com. (Note:  I asked for a specific breakdown, and CARFAX has not supplied this data. In addition, for comparison purposes, I sold about 700 used vehicles during this same period).

The exact magnitude of this problem is far reaching. There are nearly 18,000 franchised dealers in the US that may be in a similar or even worse situation. I feel that dealers should not be forced to pay an unfair premium to CARFAX in order to market their vehicles and compete online. Moreover, Cars.com and AutoTrader.com should align their business model with the interests of their most valuable customers - the dealers. We paid the monthly fees that allowed Cars.com and AutoTrader.com to flourish – we should not be penalized as a result.

Disclaimers:
• Opinions AND VIEWS SET FORTH HEREIN  are my own AND DO NOT REPRESENTS FACTS.   SUCH OPINIONS AND VIEWS COULD BE WRONG. They do not represent the companies named or cited in this blog.
• I am not a lawyer. This information, especially legal advice, can be completely incorrect. No warranties are provided or expressed. Any reliance on such information is solely at your own risk.
• I am not privy to ANY details of the backend operations/analytics of any site mentioned in this blog
• This blog does not provide financial advice, and should not be interpreted as such.
• All trademarks are properties of their respective owners.

Comments

Jeremy, one alternative might be to "brand" your first image (thumbnail image) with an AutoCheck logo. This way on the Search Results Page consumers could see that you have this. If you used Dealer Specialties, we could do this for you, other providers can also likely do the same.

Oct 4, 2012

Jeremy, you hit the nail on the head. I share your exact observations. They are definitely taking advantage of dealers. I refused to pay carfax what they wanted. If you file a complaint with the FTC, lets have the NADA and various state dealer associations know about this, to support a solution to this potentially unfair trade practice or anti-trust situation.

Oct 4, 2012

Autotrader and cars.com should know that Google Autos is in test mode with a handful of west coast dealers. Once it goes national things could and probably will change. We are considering dropping the lower performing site and giving Google Autos a try. Imagine what would happen if all dealers dropped cars.com or autotrader! Consumers would still buy cars, they just would go elsewhere to find them!

Oct 4, 2012

Another example of a corporate cult trying to impose its will on the marketplace. Got to love BMW's solid business decision.

Oct 4, 2012

Jeremy understands the power of branding for his own purposes. He pays BMW a huge premium over an alternative auto maker so that he can leverage the investment BMW has made over the years in their brand. He pays Autotrader.com and Cars.com a huge premium over a lesser trafficked inventory site to leverage the investment they have made in their brands. I'm confused why he doesn't wish to apply the same logic to Carfax?

Oct 4, 2012

Jeremy understands the power of branding for his own purposes. He pays BMW a huge premium over an alternative auto maker so that he can leverage the investment BMW has made over the years in their brand. He pays Autotrader.com and Cars.com a huge premium over a lesser trafficked inventory site to leverage the investment they have made in their brands. I'm confused why he doesn't wish to apply the same logic to Carfax?

Oct 4, 2012

Hey Philip,

Thanks for the comment and reading my post. First, in the interests of full disclosure, I'd like to clarify if this is the same Philip Moore that lists his occupation on LinkedIn as the Director of Strategic Insights at Carfax? Second, to answer your question, I absolutely understand the importance and complexity of branding, and I'll address your concern.

While many car shoppers may know CARFAX, I feel many more shoppers know that Experian is the company that supplies their personal credit report - the same company that is supplying the "credit score" necessary to finance the car they're researching – never mind the same score for other important life decisions (e.g. mortgage, loans, etc...) Second, from a high-line standpoint, it is my opinion that your CARFOX icon damages many premium brands - I certainly will not promote it at my dealership. Finally, one more point, I've seen many of your TV ads that, in my opinion, attempt to portray car dealers as untrustworthy and unscrupulous businesses - and therefore pushes consumers to trust CARFAX over the dealer. So, to answer your question, yes I understand branding and it's my opinion that CARFAX, as an overall brand, is not stronger than AutoCheck/Experian.

Thank you,
Jeremy

Oct 4, 2012

We tried carfax for 6 months and made no difference. So we are using autocheck and we have sold more cars than ever. I think that the idea of getting the autocheck logo in the first picture it's a great.

Oct 4, 2012

Here are 2 things that Carfax offers that I'm surprised don't get mentioned very often:

1. They provide a "Warranty Check" that lists all of the warranties that are on each vehicle.

2. They tell you if there are any opened recalls on the vehicle.

Is there an economical way to get this information without the Carfax? If you have to spend 20 minutes on the phone for each vehicle you don't know the exact warranties on, that could take a long time and there could always be issues with vehicles if you sell it to a customer and it has an opened recall on it.

Oct 4, 2012

I recommended the change from Carfax to AutoCheck at my previous dealer group and we currently use AutoCheck at our dealership. The issue has never been customer interest in a Carfax; when handed an AutoCheck report, customers are fine. The real issue is that because Carfax has an exclusive program with AutoTrader and Cars.com, our inventory has the "Get a Carfax Record Check" link instead of the snappy logo and "View the free Carfax report". As a result, and as the Carfax rep points out, online shoppers may think there's something to hide.

That AutoTrader and Cars.com have sold the exclusive right to extort money from dealers is true evil. That the best sales position Carfax can take is that they are the only choice is sad. My experience is that people that use both AutoCheck and Carfax actually prefer AutoCheck. For consumers, of course, that's not so much an option on AutoTrader or Cars.com.

Oct 4, 2012

Comments 1 - 10 of 39

You must be logged in to comment

Login Create an account

Add your comments:

   

Jeremy Alicandri's Recent Posts

Related Posts

  • Customer Experience Study Identifies Expectation Gap Between Dealers and Consumers

    We at DrivingSales recently concluded a very thorough customer experience research study revealing clear indicators that trust and transparency are paramount for sales growth and future success in automotive retail. Read post

  • CallSource Manages Nearly One Million Calls a Month for OEMs/Dealer Groups, a 100% Increase Year Over Year; Automotive Veteran Bill Bieser Joins as VP Strategic Accounts

    Bieser brings 25+ years of automotive sales experience to the company that invented call tracking; CallSource has tracked over one billion calls since inception   Westlake Village, Calif. – March 31, 2015 - CallSource, the U.S. leader in call management, tracking, and training, today announced its call management volume for its OEM and enterprise group customers has doubled to nearly one million calls per month year over year. This significant growth parallels the increase auto dealers are seeing in incoming phone leads from consumers who are ready to purchase a vehicle. The company also announced that Bill Bieser, an automotive retailing veteran, has joined the team as Vice President Strategic Accounts. Bieser is charged with managing and accelerating the continued growth within these market segments. CallSource invented call tracking and has tracked more than one billion calls to date. Today, with state-of-the-art call management innovations, the company qualifies incoming lea...Read post

  • Will Boomers and Millennials Ever Understand Each Other?

    Millennials are often misunderstood by Baby Boomers creating difficult situations when hiring and retaining the 25 to 34-year-old age groups. Why is this? Will Baby Boomers and Millennials ever understand each other or will cohesion and understanding help your business? Find out in this passionate post by Grant Gooley.Read post

  • Creating an Excellent (CX) in your Store

    A recent quarterly digital intelligence briefing from Adobe and Econsultancy titled Digital Trends 2015 outlining the most exciting opportunities for your organization, ranked Customer Experience as number one for the second straight year. The study was conducted on more than 6,000 marketing, digital and ecommerce professionals around the world ranking things like content marketing, mobile, social, big data, personalisation, location based services  and more. Customer Experience or (CX) as a theme has increased the gap from 2014 between things like mobile and social. Last year 20% ranked (CX) as the most exciting opportunity and the number has increased in 2015 to 22%. It is clear that in the coming year we will see a ton of activity in this area, so how can your dealership ensure an excellent (CX)? Customer Experience is defined as is the sum of all experiences at various touch points a customer has with a supplier of goods and/or services, over the duration of their relatio...Read post

  • The Fruit Fly

      Fruit flies are pests that are found in homes, restaurants and grocery stores - anywhere there is fresh produce present. They are attracted to rotting or fermenting fruit on which to feed and lay their eggs, and they are relentless and near impossible to get rid of once they have found a home.   Fruit Flies Everywhere! Several years ago, I noticed that I was increasingly trying to shoo these pests away from my face at meals, or just walking through my kitchen every day.  The fruit fly situation became unbearable.  I made several trips to the store to purchase flying insect killer. I purchased several brands, and they all seemed to take care of the problem at varying degrees. I would then spend the next few minutes cleaning up the mess of dead fruit flies and foul smelling insect killer. Well, this went on for days. Every day, I would arrive home, spray with vigorous purpose and clean the mess - only to have to do it again, day in and day out. After a week or so, I realized...Read post

  • Hiring the right people is easier then you think.

    Your best prospects for future success will be those who closely match the best of what you already have. Gain an understanding of what keeps these people motivated and performing at peak ability. These are the traits you will need to advertise and hire for.Read post

  • Retention, Loyalty or Acquisition Marketing?

    We all want new customers. And it’s certainly mandatory to retain a customer to create a loyal one. But how we market our dealerships is increasingly important -- as each form of marketing will deliver different results. The three terms: loyalty, retention and acquisition marketing, all have their own distinct meanings and should be used to satisfy different goals and objectives. While they are often not distinguished differently within most dealerships, they truly have different meanings, and will generate different results.   According to the experts at the Cambridge Dictionary, the definition of customer loyalty is as follows:   “The fact of a customer buying products or services from the same company over a long period of time.”   According to Wikipedia, customer retention is defined as follows:   “Customer retention is the activity that a selling organization undertakes in order to reduce customer defections.”   And acquisition marketing is defined as th...Read post

  • Wayne Reaves Adds CarStory Market Reports to its Nearly 2000 Dealer Websites

                    The partnership marks the second customer-wide rollout of the reports by a dealer website provider and grows the CarStory dealer network to more than 3,000 dealerships nationwide.   Austin, Texas – March 23, 2015 – CarStory, the industry’s largest provider of crowdsourced data and analytics on used vehicle pricing and preferences, today announced that Wayne Reaves, a leading provider of independent dealership websites, has integrated CarStory Market Reports into its customizable website platform.  A free merchandising tool and lead source, CarStory Market Reports are available directly on all Wayne Reaves dealership websites.   The partnership is the second in a series of alliances with website providers that make CarStory Market Reports easily available to dealers at no extra cost. CarStory’s dealer network now numbers over 3,000 dealerships nationwide.     “Keeping consumers engaged once they land on a dealer website is key to conve...Read post