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CARFAX faces major challenges

Discussion in 'Websites, SEO, SEM, Display, Social, Marketing' started by Jeremy Alicandri, Mar 19, 2013.

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  1. Jeremy Alicandri

    Jeremy Alicandri
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    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:



    DISCLAIMER:
    This is based on the opinions of the author and nothing contained herein should be construed as a matter of fact.
     
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  3. Jeff Kershner

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  4. Jeff Kershner

    Jeff Kershner
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    The momentum hasn't stopped.

    Just announced - Bellavia Blatt Andron & Crossett P.C. announced this week it has joined forces with Berger & Montague P. C. in prosecuting its antitrust suit against Carfax.

    "Having Berger & Montague, one of the premier antitrust law firms in the country join this lawsuit confirms the validity of our antitrust allegations against Carfax," said Bellavia Blatt Senior Partner Leonard Bellavia. "We are pleased that a firm with this level of expertise in antitrust litigation will help to right the wrongs we allege that Carfax has committed against automobile dealers and consumers nationwide."

    The lawsuit charges Carfax with impairing the competition through exclusive alliances with Autotrader.com, Cars.com, and several OEMs. As a result of those partnerships, dealers are forced to conduct business with Carfax at what claims to be inflated prices. Carfax then spends these inflated revenues on ads that showcase dealers as dishonest and untrustworthy.

    This is one the reason we are seeing the listing companies like autotrader and cars.com (just announced) offer dealers the option of using AutoCheck.

    What do you think?
     
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