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DealerDefender Aug 2011

Semper Gumby

Written by Jim Ziegler


Although I was never in the military, I grew up in a military family; the son of an enlisted man in the U.S. Navy. My father was the senior enlisted man in the Navy when he retired in the early seventies... an E-9 Chief Petty Officer with 34 years of untarnished service, three wars, Blockade of Cuba, and 17 aircraft carrier cruises.

 

So, when I was 20 years old, during the height of the Viet-Nam war, I went downtown one day and enlisted in the United States Marines.

 

Flat feet, standing there naked with 20 other recruits, the doctor took one look and my military career was over. I worked throughout the Viet-Nam conflict as an aircraft sheet metal mechanic and aircraft welder at the Naval Air Rework Facility - U.S. Civil Service - a defense worker.

 

Regardless, I've always held the U.S. Marines in high regard. Traditions and honor are rare commodities in our modern self-centered world.

 

More than just something you say, to a Marine, the slogan "Semper Fidelis" (Always Faithful) is a code of honor, a way of life.

 

One thing about a marine, they'll improvise and adapt to anything you can throw at them, never down...never defeated... always flexible and resilient.

 

"Always Flexible" ... "Semper Gumby"

 

Maybe that conceptually brings a smile to your face BUT the reality of it is... as I've said many times... "You can grow, or you can die, but you can't stay where you are."

 

It's Never Coming Back... Never-Ever

 

It's never going to be the way it was, and; if you're living in the past, camping out with your obsolete memories of the way it was, you're dog meat. If you are not flexible and open to change, you're extinct.

 

We've endured some tough times and there's no guarantee we're out of it.

 

I'm not saying traditional sales and marketing processes are completely dead or invalid; quite the contrary, people skills, communication, negotiation, finesse and persuasion are essential elements in the sales process. People don't buy cars, they buy the sales person, the product and the place before they'll buy at any price. Technology by itself will always lose to personality and relationship. 

 

The market will continue to shift and paradigms will be perpetually shattered as we move forward in uncertain new territory. Our ability to react has got to be more decisive... procrastination has put many dealerships out of business. Your ability to dominate your market requires quick and accurate decisions translated into action. In other words, look at everything and be prepared to make changes in personnel, vendors and processes.

 

Don't lose the war when you're fighting with swords because you didn't have time to see the machine gun salesman's presentation.

 

Thirty-five years in the automobile business; many times I've been called an "Old Car Dog"... I wear that with a fair amount of pride. I've seen the 'best practices' of the best players in the industry...and I've seen a lot of things that never worked... and won't work the next time someone tries it.

 

The difference is my ability to be 'flexible' and open to change. I embraced technology early on with my own income producing website as early as 1994 when most people were still looking for the 'on' switch. I've often been misquoted about what I've said about technology and the automobile business. Ask me sometime, I'll tell you what I actually said.

 

There's a lot of false readings in the news right now and you shouldn't make the wrong conclusions without looking at all of the contributing factors.


General Motors posted a second quarter net of $2.5 billion on revenues of more than $39 Billion. That's an 89% increase in net profitability.

As Billy Fuccillo might say "That's HUGE".


Officially, the news services quoted General Motors' chairman and CEO, Dan Akerson, as saying “GM’s investments in fuel economy, design and quality are paying off around the world as our global market share growth and financial results bear out.”

 

Additionally, Dan Ammann, General Motors' senior vice president and CFO offered up this sound bite for the press... “Our earnings and cash flow are solid and we’re going to keep working on the fundamentals of strong brands, great products and operating leverage to create profitable growth around the world.”

 

There'll be no General Motors bashing this time BUT, at the same time it's not entirely because of great new product, styling and fuel efficiency or superior competent management either.

 

While these executives are holding press conferences taking the bows for increased sales and profitability let's remember the Japanese manufacturers have been on the ropes since March with no hope of complete recovery for some months into the future.

 

Taking nothing away from GM... the new product is exceptional. Of course it would be better if their dealers could get the inventory that sells. With GM car sales up 8% and crossovers up more than 20%, is it safe to assume they took a lot of that business away from Toyota, Nissan and Honda?

 

Many things have changed at General Motors but one thing seems constant.. for the last thirty years you could always count on GM to run heavy advertising promotions on cars the dealer didn't have and couldn't get. They've done it repeatedly. Hell, the redesigned Camaro was getting stale from promotional material three years before they ever built one.

 

My belief is that if GM would produce the cars and trucks that are their hot sellers, they could double the numbers...they're operating at half their retail sales capacity.

 

AND, I'm not entirely buying into the official line of bull crap that they are straining production capacity...or parts availability. No they are just accounting themselves into a profit.

 

Ford and General Motors both, I believe they are deliberately under producing inventory to 'play it safe' in an uncertain economy.

 

The Sonic Cometh

 

No doubt, GM is on a roll...and they deserve a round of applause, but not a standing ovation...not yet anyway.

 

Now, they are ready to launch 'The Chevy Sonic' going heads up against 'The Ford Fiesta'. The first subcompact built in Detroit on U.S. Soil. Fiesta built in Mexico, hence the catchy Spanish name... "El Fiesta". Let's hope GM doesn't screw the dealers over with low profit margins on the invoice like Fiesta.

 

Estimated to come in under $14,000 with a 40 miles per gallon rating, of course it's going to be a best-seller...if they'll build them and get them to the dealers. I know that's asking a lot considering that culture has survived and continued.

 

Yes, Virginia, the subcompact car market is about to explode. I'll talk about that in few paragraphs later.

 

Does Nissan have a bad reputation, deserved or not, for mistreating and abusing their dealers. Oh, the stories I've heard about corporate arrogance, unreasonable demands, bad audits and incompetence. Maybe it's just the malicious fabrications of a few malcontents...or maybe not.

 

Remember, I love to hear from you, and...you can always email me with confidentiality with news and events about the industry...or any manufacturer...or executive.

 

Now remember this, be fair when discussing the manufacturers, their employees and especially manufacturer top-executives. In truth there are some really great people in these positions...many of them are truly friends of mine and I count myself privileged to know them.

 

In other words, not all factory executives are arrogant, know-nothing, pompous, inept, incompetent, over paid piss ants...just some of them..just a few actually...AND those are the ones I love to write about. 

 

One thing that's not a rumor is The Nissan Leaf is winning a lot of market recognition. The latest is a five-star crash rating from the National Highway Traffic Safety Administration's New Car Assessment Program.

 

Nissan has some incredible product in the pipeline, but this car is the technology superstar being the first total electric car in the market.

 

So as a reward for Dealer Loyalty, Nissan is raising the price in 2012 Leaf by anywhere from $2400 to $3500 per unit. Of course, it makes sense because they did add heated seats, heated steering wheel and a battery warmer...with a quick charge port on the one they jacked up $3500.00.

 

According to researchers at Harvard... don't expect Electric Cars to be a huge seller until Gasoline hits $4.50 a gallon at the pumps.

 

There's your answer... at the current administration's rate of efficiency of flushing our future, Obama should have us there before the election.

 

Seriously, according to the study, right now hybrids are still $5377 more expensive to own and operate than traditional gasoline engine cars... even all electric vehicles are still $4819 more expensive to own and operate over the life of the vehicle.

 

Even though not currently anything more than a reasonable niche, all electric and advanced hybrids are going to continue to come regardless of the ups and downs of gas prices.

 

Even BMW is introducing 2013 models including all-electric and hybrid Beamers. The BMW i8 hybrid will sticker more than $100,000 and they're claiming it'll have all of the appeal and high-performance, handling reputation...a driver's car. Now that sounds scary but BMW engineers are boasting their smaller "Born Electric" i3 all-electric Model will accelerate 0-60 in less than 8 seconds.

 

The challenge for all-electric and advanced hybrids face is better battery technology being developed over the next 10 years, including greater range on a charge, less cost per unit, charging stations convenience as well as plug-in, and longer battery life before replacement.

 

The Small Car Revolution is here...and it's permanent... 

 

When I blew into Atlanta in 1982 with my mattresses tied to the roof of my buy-here pay-here car, I had my every earthly possession inside the car with me... television, clothes, everything I owned. You see it was a big car... a 1973 Lincoln Continental with a 472 cubic inch engine. it was at least 25 feet long bumper to bumper...couldn't see the hood ornament in the fog.

 

I loved that car. We all did. 'Big cars' and 'Americans' are internationally synonymous.

 

Since then, over the last 25 years, I've owned nine Town Cars (new) ...two Expeditions... and, most recently, nine Escalades. (seven Corvettes and one Mark VII) Are you catching a pattern here? My wife has had all imports, usually smaller SUVs and sports cars, currently a Mercedes SL550.

 

Prying Americans away from our large rides kicking and screaming hasn't been easy... But Now... with CAFE standards set at 54 miles per gallon in the next decade, we're out of options. With China, India and the emerging markets demanding incredible increased gasoline consumption; it's never going to be the way it was and prices will only go in one direction.

 

The U.S. manufacturers have finally done the correct thing and added quality and content to small cars and began to concentrate seriously on the segment they've previously abandoned to the Asian imports. At the same time, virtually every manufacturer, international and domestic, has stepped up their games in the small car market...and now the ultra small car market as well. Even with Smart Cars on life support... don't say dead yet?

 

Fiat might the right car at the right time... go figure.

 

Corolla has always been this segment's leader but now, Chevy Cruze, Honda Civic, Ford Focus, and Hyundai Elantra are closing from the back of the pack as we approach the turn. The strong emphasis on redesign as well as re-engineering is happening virtually every carmaker worldwide.

 

The Cruze replaced the lackluster Cobalt and the public responded. We may have finally entered an era of "Small Luxury Cars". Content and personalization, technology and superior fit and finish may be the new upscale ride. With the small car segment accounting for nearly 18% of U.S. car sales with an "Up Arrow" manufacturers see the need to build better quality, more luxurious and more gadget and technology filled cars.

 

A case in point... a long time leader in the small car arena, Honda Civic, just took a huge hit when  Consumer Reports scored the new 2012 Civic "Too Low to Recommend".  Excuse me, we're talking about the Honda Civic here...this car has been the standard for sensible engineering and always at the top of Consumer Reports best cars recommendation. 

 

I can't recall a time when Honda Civic was NOT recommended by Consumer Reports. They've used it in their marketing claims for decades. What in the hell happened?

 

Now, this hurts. I have a lot of great friends who are Honda Dealers...and... they're not happy. Oh, they'll march in unison publicly showing solidarity and backing the product and defending it...it's their duty.  

 

BUT, when I hear what they're saying in private, fireworks are flying and Honda is getting a well-deserved earful from some.

 

You see this is what really went down... I mentioned a few issues back when I was writing elsewhere that Honda used to be the standard of innovation and what's new and exciting. They were the technology and engineering leader in small cars. It's been a long time since Honda had any technology or engineering feature which was solely theirs alone... anything breathtakingly unique. They have exemplified "Bland" for quite a long time now BUT they maintained market popularity because of great engineering and quality of product. If they've evidently given that up for cost savings... Kia and Hyundai will bury them.

 

It actually began nearly a decade ago... they advanced this concept of "de-contenting" the product. Now, if you'll remember; at the time, I wrote about it saying something to the effect that I strongly felt they were losing it...bad idea.

 

Honda was not the only manufacturer to buy into the idea of de-contenting product. De-contenting was supposed to maintain product integrity at a cheaper production cost.

 

Well, I have no documentation, only a strong suspicion here that the new 2012 Civic might be a victim of de-contenting going too far.

 

Surprisingly enough one of the only entries in the segment to score lower was the redesigned Volkswagen Jetta. Now, I am fairly certain the Jetta redesign and reengineer was significantly de-contented to reduce price which Volkswagen has been touting. BUT did both of these manufacturers de-content quality for cost savings?

 

According to Consumer Reports, the 2012 Civic handled more poorly with lower quality interior, bad ride, road noise and longer stopping distance than previous Civic models.

 

There's no joy in seeing this great company fall so far in this important market barometer, especially after all of the other hardship they've recently endured and is still ongoing.  One thing is certain, somebody is going to pay for this...Japanese honor being what it is...somebody is going to be sent to the garden to do that knife thing.

 

As I write these words, it's Sunday, August 7th. I've been sitting here since 8:00 A.M. hardly taking a break as I researched and wrote this article.

 

Earlier this afternoon I received a call from Jim Farley, Group Vice President, Global Marketing, Sales and Service of Ford Motor Company.

 

That's right, Farley called me at home...on a Sunday to discuss some things I've written about Ford recently. We talked cordially for more than a half hour more specifically about Lincoln...the plan...the problems and challenges they see in turning the franchise back to world-class luxury.

 

You know, I pulled no punches and wrote some criticism of Ford and their approach with the dealers and the investment. I am so impressed that he not only took the time to call, but that he was interested in hearing my viewpoint.

 

My recently I've had access to executives at General Motors, but, if you'll recall, I received a call from Alan Mulally personally a year ago about something I had written. Now, I am conversational with Jim Farley... Mark Fields and I have always hit it off. I have to believe if there were ever a nuclear war that Mark Fields' hair would remain completely intact, not a hair out of place.

 

Jim Farley invited me to Dearborn for the tour and gave me his cell number if I ever had an issue to write about. NOT, that he would always change my mind or that we would always agree. I am going to write what I am going to write.

 

I am just impressed with the culture that exists now with Ford of reaching out and communicating considering what used to be such a close-minded wall between Ford executives and commentators.

 

Farley and I were laughing when I commented that Lincoln had some great product moving forward... with the exception of that ugly-ass MKT.

 

Somebody was obviously on drugs when they designed and rolled out that goofy-ass Ford Flex. You know they got their butt handed to them with that mistake... so who's bright idea was it to make a Lincoln version of it?

 

I am going to take him up on the invitation to visit Detroit. AND, I'll keep everyone posted.

 

On a personal note, no Remy Martin Louis XIII this time. I am on a diet (eating plan) and workout regimen that completely takes me off of wine and liquor until October. (Bummer)

 

Debbie and I just returned from the National Speakers Convention in Anaheim, California last week. That's one of the premier events in our year.

 

I have so much going on it's amazing how life how accelerated since I resigned as a columnist for Dealer Magazine.

 

The Internet Battle Plan in Las Vegas was incredible with more than 80 paid dealership attendees, sponsors, hot lunches, cocktail reception and six great presenters.

 

The keynote speech by Sean Wolfington of Tier 10 marketing was exceptional.

 

Bringing it to the Northeast and NYC area... The next Internet Battle Plan is October 5th-7th in Park Ridge New Jersey, slightly north of Newark. http://www.InternetBattlePlan.com  Incredible line-up of great speakers on automotive technology sales and marketing...again.

 

September 28th, I am speaking a keynote session at the Bobit F&I Conference and Industry Summit in Las Vegas http://www.industrysummit.com/

 

As you may be aware, I am now a writer for F&I Magazine on Dealership Sales, F&I, Technology-Marketing, and Management Processes.

 

And, I'm writing for Wards Dealer Business Magazine which is where Jim Farley read my article in the August issue. http://wardsdealer.com/ar/auto_dr_jekyll_mr/index.html 

 

AND, if that's not busy enough for you... I am moderating a session at the 2011 J.D. Power Internet Roundtable  http://businesscenter.jdpower.com/Events.aspx?f=/jdpacontent/CorpComm/Events/AutoInternetRoundtable/AutomotiveInternetRoundtable.htm

 

Not Done yet... AND I am going to be presenting the F&I Workshop at the 2012 NADA Convention, back in Las Vegas... title of my presentation is going to be... 20 Persuasive Processes to Sell F&I Products 


Life is incredible...and Debbie and Sadie and I are living the dream. I'm on Twitter every day at 'JimZiegler'  and find me on Facebook at http://www.FaceBook.com/jimzieglercarguy 

 

Please keep those calls and emails coming. You are my connections and friends.

 

JIM

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Comment by James A. Ziegler on August 25, 2011 at 1:00pm
Actually... NO   and wouldn't either.... I just bought a new Buick Enclave... of course still have the Corvette and the Mercedes 550SL. Maybe this signals the end of the Escalade era in my life.
Comment by Ralph Paglia on August 25, 2011 at 12:58pm
...BEFORE this post!
Comment by Ralph Paglia on August 25, 2011 at 12:57pm
Jim - I will bet you a bottle of Louis the X!!! that you have NEVER actually driven one of those Pontiac Aztec turds!
Comment by James A. Ziegler on August 19, 2011 at 3:52am
I miss the Pontiac Aztek...   :)
Comment by Tom Gorham on August 18, 2011 at 6:37pm
I am personally in AWE of people who buy such butt-ugly cars.  That's not a brand statement, just an observation.
Comment by Jason Manning on August 18, 2011 at 12:30pm
Jim, beauty is in the eyes of the beholder or the salesman that made them go blind!  It does have an ugly factor though. :)
Comment by James A. Ziegler on August 16, 2011 at 3:32am

Jason and Ralph, yes I hear that all of the time on many lots, from many sales persons, about many cars...the sales person says... "Wait til you drive it?... You've just got to drive it" 

 

Well excuse me, no matter how well it drives, handles, or performs...nobody's gonna buy an ugly car. AND, the Ford Flex and the Lincoln MKT are double-ugly. 

Comment by Ralph Paglia on August 15, 2011 at 5:04pm
Jason, I once spent an afternoon cruising around in a new Ford Flex with Ken Grody of Buena Park, CA and came away VERY impressed by the vehicle's capabilities, ride quality and how incredibly quiet it was inside for a vehicle with so much interior space... I don't own a Ford Flex, but would certainly consider one from all utilitarian perspectives.  However, it is hard to make a box on wheels look sexier than a box...
Comment by Jason Manning on August 13, 2011 at 7:29pm

Great read!  Maybe some executives can take a pointer from Ford and simply listen.  Sticking to the basics like Farley is genius, you have to admit.  Others may have egos that block feedback and keep from moving their businesses forward.  In Ford's defense of the Flex, I tried to sell a new Highlander up against it to a customer who built Gulfstream G550s (real sharp buyer).  I could not sway him one bit.  Those owners love that SUV for many reasons.

 

Keep giving it to us, straight, Jim.  Life is short and careers are shorter.  Even if you get a second chance, you've lost valuable time and so much more.

 

Jason Manning

Comment by Keith Shetterly on August 9, 2011 at 6:23pm

Got my vote!

 

Comment by Ralph Paglia on August 9, 2011 at 6:22pm
Keith - I know how Jim would balance the budget... He would high gross the Chinese and get our money back!
Comment by James A. Ziegler on August 9, 2011 at 9:56am
Yes Keith, I was never afflicted with humility. The biggest surprise was when I got a call at home on a Sunday from Jim Farley.
Comment by Keith Shetterly on August 9, 2011 at 9:37am
Jim Ziegler for President 2012!
Comment by Keith Shetterly on August 9, 2011 at 9:37am
You know, Jim, I just hate it how you hold back like this and are so wishy-washy.  Just kidding!  :)  Great read, as usual.  Thank you!
Comment by James A. Ziegler on August 9, 2011 at 8:36am

Thanks Jae, I really do have a passion...you are appreciated

 

Comment by Jae Chang on August 9, 2011 at 8:33am
You've just re-capped the state of the industry in the way that you do.
Comment by James A. Ziegler on August 9, 2011 at 5:43am
Thanks Tom, I am excited every time I write one...
Comment by Tom Gorham on August 9, 2011 at 4:56am
Great article Jim. Spot on as usual!

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