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Facebook, Google More Likely Interested in Carfax than Waze

by Roger Lanctot | 5月 28, 2013

Rumors ran rampant last week, and the week before, that Facebook and then Google were in talks to acquire Waze, the Israel-based crowd-sourced navigation solution, for approximately $1B. The price may be about right but the acquisition target is wrong.

All arrows are pointing in the direction of R.L. Polk and Carfax as the next big automotive acquisition.  Industry sources suggest that R.L. Polk is the more likely acquisition target, primarily for its CarFax division. For several months it has been known that R.L. Polk is exploring strategic options, including the sale of Carfax or even an IPO.

Potential acquisition candidates cited in press reports include Automatic Data Processing (ADP), Reynolds and Reynolds, Dealertrack Technologies, KAR Auction Services, McGraw-Hill Cos, J.D. Power and Associates, Cars.com and Cox Enterprises, which owns AutoTrader.com. AutoTrader.com has likely taken itself out of the running after announcing a marketing relationship with Experian which owns Carfax vehicle history report (VHR) competitor AutoCheck.

The road to an acquisition was recently rendered a bit rocky by a lawsuit being threatened by a dealer franchise attorney – Leonard Bellavia – on behalf of automobile dealers challenging the alleged monopolistic tactics of Carfax including exclusive agreements with OEMs and others locking in premium charges for VHR for certifying used cars. The Carfax service is used widely by OEMs as well as by Cars.com and Autotrader.com. One of the most galling elements, of course, is recent television ads that not only encourage consumers to “ask for the Carfax” vehicle history report, but that disparage dealers who don’t make the information available.

Lost in the news of the potential R.L. Polk sale and the threatened lawsuit is the actual treasure-trove of data that Carfax represents. Carfax has compiled what it describes as 11 billion vehicle records from 44,000 sources across North America including VIN-specific service histories and diagnostic data.

In February, Carfax launched its Carfax Service Network designed to help dealers better target service opportunities by leveraging the massive Carfax database. In case anyone failed to get the message, Carfax noted that the Automotive Aftermarket Status Report of the Automotive Aftermarket Suppliers Association identified an estimated $60B in “manufacturer-suggest maintenance (that) goes unperformed every year.” Carfax is offering to help dealers and independents better target those opportunities.

But even more essential than that, to a Google or Facebook, is the VIN-related data including owner information that can be leveraged for better targeting of advertising. As if Google and Facebook didn’t already know enough about the users of their services for the purposes of targeted messages, the acquisition of Carfax will enrich these organizations with mine-able data regarding the average person’s most expensive asset.

By comparison, Waze has a crowd-sourced map that neither Google nor Facebook need and a user population that is miniscule relative to the existing user base of either Google or Facebook. And Waze has failed to solve the location-based marketing/advertising challenge in a material way capable of having a transformative impact on either Google or Facebook.

This is not to say that Waze is unpopular. Waze is the go-to navigation solution for tens of millions of users around the world.

But Carfax is a play for immediate revenue, a recognized and powerful brand, a massive mine-able database, and a roster of contractual relationships with OEMs, dealers and independent shops that promises ongoing returns. But, most important for Google and Facebook, is the synergy of the Carfax database with Google’s and Facebook’s existing resources and advertising model. No other potential acquirer has as much to gain from a Carfax acquisition as either Google or Facebook.

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