REQUIRED DISCLAIMER: This article is based on the opinions of the author and nothing contained herein should be construed as a matter of fact.
At least from my perspective, it seems 2013 is proving to be a difficult year for the folks at CARFAX. After years of being the nation’s top VHR provider, the company is facing serious challenges. Since I began blogging about CAFAX, there have been major developments. These developments include a controversial Automotive News story, a potential anti-trust lawsuit seeking treble damages, and a 20/20 investigative report that nationally portrayed CARFAX’s reports as misleading. But wait! There’s more! CARFAX’s parent, RL Polk, announced the company is for sale!
Last year, I published near 10 pages of material outlining what I felt was wrong with CARFAX’s business model. However, I’m going to keep this post short by just providing my opinions and insights of some of the more recent developments:
- 20/20 Story – While I enjoyed the investigative journalism, from an industry expert’s perspective, I didn’t learn anything new. Both CARFAX/AutoCheck have limitations –neither report is infallible. However, the 20/20 report substantiated(opinion) my November 30 opinion to OEMs where I wrote: “I feel the OEMs are distracting their branding efforts from the reliability of their own certification programs and instead attempting to substantiate the reliability of their vehicles by promoting their association with CARFAX. This is a dangerous practice for OEMs since associations with CARFAX will also associate the OEM’s brand with issues that plague CARFAX.” Ok, so now what? In my opinion, I believe this 20/20 story is just another wake-up call for the car manufacturers to better brand their own Certification programs and reduce their dependence on co-branding with companies like CARFAX.
- Potential Anti-Trust Lawsuit – Leonard Bellavia is building momentum for an anti-trust lawsuit against CARFAX. From what I understand, Bellavia is claiming that CARFAX used exclusive agreements with OEMs and other companies to force dealers to pay premium charges for VHR reports. Apparently, dealers who join Bellavia’s suit are seeking treble damages. I won’t provide legal advice, but Bellavia provides detailed information on his suit on this website: www.DealerLaw.com (scroll down for the red CARFAX box)
- R.L. Polk For Sale (or IPO) – While a company executive is quoted as stating: “There was no catalyst that made this happen,” I naturally have my opinions as to why Polk is looking for a new home. Given AutoTrader’s canned automotive IPO, and other factors, it’s my opinion that Polk’s announcement is probably more about finding an exit plan for its owner Stephen Polk vs. an actual IPO. I’m not sure if Mr. Polk wants to retire or continue with his business, but I don’t feel there is Wall Street IPO appeal for this niche company – especially with all the looming issues. But I do feel Polk could be a great acquisition for a big data firm. With that said, I’d like to add that I never met Mr. Polk, but I did have one interaction with him via e-mail that left me with a favorable impression. I do know people who describe him as a friendly and classy industry veteran.
If you want to read a more detailed analysis of my coverage of CARFAX, and related articles, below is a timeline of events that started on October 3, 2012 with my first published CARFAX post:
- October 3*
- I posted DrivingSales Blog titled "OPINION: CARFAX is extorting my dealership…"
- Post receives several thousand views.
- October 29
- Pro-Dealer Advocate and Industry Veteran, Jim Ziegler, publishes "CarFax Gets Its Facts Wrong" in Wards Auto
- Jim's entrance brings major industry attention to the debate, and he shares his post on ADM and Dealerelite.
- November 30*
- I publish a detailed opinion analysis of CARFAX. “OPINION: CARFAX’s Policies are Bad for the Dealer, OEM, Consumer, and Competition: 8 Recommendations to Fix It”
- December 10
- Automotive News Publishes : “How Carfax locks up car history” by Arlena Sawyers
- January 2
- I launched FreeTheDealer.org. A petition to AutoTrader.com, Cars.com, and Franchised Manufacturers to end their CARFAX exclusivity agreements and allow dealer’s the right to choose a VHR provider: www.FreeTheDealer.org
- January 23
- Famed Pro-Dealer Lawyer, Leonard Bellavia, begins recruiting dealers to sign up for a mass action anti-trust lawsuit against CARFAX. Later, in February, an ad appears in Automotive News seeking to sign up more dealers. It’s also posted on his website:
- The NADA Convention occurs in Orlando.
- My November 30 opinion analysis, “OPINION: CARFAX’s Policies are Bad for the Dealer, OEM, Consumer, and Competition: 8 Recommendations to Fix It” is mailed to thousands of dealers in DrivingSales’ Quarterly Magazine.
- March 7
- WSJ announces that CARFAX’s parent, R.L. Polk, is for sale and even considering an IPO. A company executive is quoted as stating: “There was no catalyst that made this happen.”
- March 15
- Investigative reporters from ABC’s 20/20 air on National TV: “Can you really trust the Car Fox?”
*The dates indicated above are right. Any correction, or update to a published post on DrivingSales.com will change the date on the post’s page, thus causing a discrepancy if you compare both. So please refer to the original dates posted above.