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Opinion: As R.L. Polk considers a sale, CARFAX still faces major challenges.

By Jeremy Alicandri on Mar 16, 2013

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:
 

CARFAX Timeline:
 

 

*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.

Comments

I did like the fact that the consumer advocate on 20/20 rightly mentioned that consumers should still check out the vehicle (i.e. their mechanic). I know that for years I have volunteered to drop the vehicle off at the customers mechanic so it can be checked out and almost none of them take me up on it. I'm sure it is part trust in our operation, but it is also laziness on the consumers part, which is what i see with Carfax. Instead of accepting the Carfax "guarantee" and its many holes. He should have mentioned getting a guarantee in writing, not unlike a certification warranty. On the very rare occasion that a vehicle slips through the crack, the increased trust and sales would more than make up for the hit of a repurchase. MN Dealer

Mar 19, 2013

CarFax has the best system to address concerns associated with negative online entries in the CarFax database. If you have a concern that a specific CarFax entry (in their database) is inaccurate then address the issue on their website by clicking on the "Data Correction Form" link on their home page. They will investigate the issue and communicate with you until a resolution is reached. Their resolution staff is the best in the industry and their system to resolve these issues is exceptional. Yes, there are errors in both CarFax and AutoCheck information databases but the resolutions can be reached if you spend the time to address the issues. There are more positives then negatives associated with CarFax and their staff will genuinely attempt to help you if you give them a chance.

Mar 19, 2013

I think the main issue with the 20/20 report was that the consumer could not detect the issue because it was not in the CARFAX database.

Mar 20, 2013

As always - fantastic coverage jeremy. Looking forward to seeing you next month in NY!

Mar 20, 2013

Thanks Jared!

Mar 21, 2013

Excellent coverage...keep it coming. Thanks.

Apr 4, 2013

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