Ziegler Supersystems, Inc. September 2003  Dealer Magazine Article

Damn, It’s Fun Being Me

Contagious enthusiasm! We just moved into our new home and now an exhausted Ziegler is sitting here at my desk on a Sunday afternoon in August…just sitting staring at the word processor and wondering what I’ll write about.

Looking around me, my new home is magnificent; Debbie has incredibly good taste and sense of design. She also designed the pool. The pool is a masterpiece with a salt and pepper bottom resembling a lagoon or a mountain pond. Water shoots out of a landscaped rock formation, which is about 10 feet high, at a rate of 200 gallons a minute and breaks into three waterfalls…It’s not uncommon to have neighbors knocking on the door asking if they can look at it.

What a wonderful country we live in with unlimited, overflowing abundance…wealth and success are available to virtually anyone with vision and work ethic. It’s too bad so many people never stop long enough to reflect upon their blessings.

Most recently, I’ve noticed a plague of creeping negativism infecting our industry. As I have predicted repeatedly, this unpredictable, erratic and fluctuating market is rapidly separating the winners from the losers…both dealers and manufacturers have fallen into the negative abyss.

It’s all about attitude and perspective you know. You create your world, your business, and ultimately you create your own destiny. Winning is a thought process.

My life continues to be an adventure. Every day of my life I wake up early and leap out of the bed, excited and glad to be alive, which by the way, really pisses, off my wife, Debbie, who is an exact opposite who would lie in bed until the sunset.

Sleeping, what a waste of precious, productive time. I’ve got deeds to do and promises to keep (Simon and Garfunkle) ...and so many places to go. My whole life has become a Doctor Seuss book... “Oh The Places We Will Go!” Traveling 250 days a year for nearly 20 years now, two-million miles just with Delta, is still an adventure.

No glass is half-empty...everything is an opportunity...nothing is a problem…everything is an opportunity

Doctor Frederick S. Perls once said... “You are the result of everything you’ve ever experienced and that point to which it has brought you.” Well guys and gals, all of my experiences have brought me to that point of total overflowing abundance and self-fulfillment…as well as professional gratification. My business is incredible...a record year (again) and growing, even in a down market. As I have written repeatedly, my corporate strategy was to attack the market aggressively and grow our business as others whined, whimped, complained and limped through it. We are consulting 85 Dealership Corporations...my sales management and F&I seminars are filled to the walls every month.

Love my family...now that we have finally moved into our new home, everything is slowly, day by day, returning to normalcy. Debbie is incredible...and Zach is starting high school football practice tomorrow at his new high school. What’s really amazing is that you, the readers of this magazine, like an extended family have vicariously watched him grow up on these pages, through these articles.

Personally, I am finally receiving recognition from so many directions for intellectual contributions to our industry...validation and credibility mean a lot to me. My track record as a futurist is set in concrete as my predictions continue to actualize, even though I’ve often gone against the cacophony of babbling bullcrap regurgitated up from the apparently bogus, allegedly corrupt, biased and inept, west coast research community through the biased mainstream industry press. I’ve certainly out-predicted and outperformed the industry outsiders who pompously thrust themselves among us to reinvent retail automobile industry sales and marketing. My accuracy for calling the industry is unrivaled. There are virtual graveyards filled with intellectual morons with advanced degrees who came to us from other industries to show us how it’s done.

...And, get this, we just ordered a new red Cadillac XLR for Debbie, which will arrive soon. (I’m keeping the Escalade) It don’t get any better than this!

Talking to Mike Roscoe on the phone…now this is so cool...Dealer Magazine is creating a “Ziegler Bobble Head Doll” to give away at the convention. Now, let me ask you this...has anyone ever created a Bobble head doll of you? (Okay Lyons, other than you...has anyone else?)

Two days ago, we’ve just returned from the annual National Speakers Association Convention, five days in New Orleans (won two-thousand dollars in the casino)...what an incredible experience. Energized and motivated, I am back in the game…can you feel the energy? Professional speaking and writing is my passion. Over the last two years, I’ve been the keynote speaker for more than 47 state automobile dealer conventions. Where else can you make this kind of money for being the center of attention?

Most importantly...I have friends...thousands of you have become close family...you’ve lived through the struggles, the setbacks, and the victories with me...line by line as I have written these articles though the years. I don’t even care if you always agree with me. We’ve bonded...I care about the dealers and I think you care about me. I took up for your causes even when it caused me pain and cost me dearly...and you’ve supported me...and Mike Roscoe...and the magazine.

So many blessings...I am flying high. It’s like I am having another conversation with a dear friend. What a perfect time to write this article.

Shuffling the Deck…

As predicted, the players are realigning and repositioning in the North American market with July sales being the strongest month year-to-date.

Toyota continues to kick ass and take names posting an 8.7% increase in sales over the same month last year. Likewise BMW jumped ahead more than 14% …Honda, Nissan and, for the most part, all of the major brand name imports finished strong.

July saw both of the major domestic car companies and one semi-domestic manufacturer limping off the field bruised and battered. General Motors was nearly on par with same month sales down only 1.8% while Ford posted a 7.3% retreat from same month sales a year ago. That must be a typo on Ford’s most recent Annual Financial Statement showing shareholders equity at only $5.5 billion…down more than $22 billion from their equity position just four years ago. Excuse me, I hate to point this out…again…but it appears they are technically bankrupt considering pension and short-term obligations.

The Chrysler Group sank deeper into the toilet with June and July progressively worse...bleeding money out of every artery.

Remember Juergen Schremmp gloating over the merger a few years ago…smirking and backslapping Germans celebrating putting one over on Eaton and Lutz. Aryan superiority triumphed. Well big guy, Eaton has mansions scattered all over Hell and Creation while Lutz is worshipped throughout the industry for his genius and innovation while Juergen is besieged with criticism and stockholder revolt crying for his head back in the fatherland. AND…Kirk Kerkorian’s class action $14 billion lawsuit is hanging over Chrysler’s head about to come crashing down on them at any time. ‘Scuse me Juergen, let me introduce you to an American figure of speech…it appears to me you are about to have your butt handed to you Big Guy.

Let me preface this statement with an opinion. (Who woulda’ thought I’d have an opinion?)  Okay, in my opinion, Chrysler’s current product is world class. The biggest single benefit coming out of the takeover was fit and finish and product quality. The bad news is the public isn’t aware of it. You need hard sell marketing featuring product and price like the summer-long sales event they’ve been pounding on network television.

Now, the Germans are blaming all of their problems on the high cost of incentives and marketing. Estimates have it that Chrysler paid out nearly $4.5 billion in incentives in the second quarter alone. No wonder they’re sitting on an operating loss of $1.2 billion for the second quarter vs. an operating profit of $476 million same period last year. So far Deiter Zetsche has not been able to the lid on it.

Great new product…bad marketing concept…the Pacifica launch featuring Celine Dion, was weak and flaccid. So, before he resigned as Chrysler group executive vice president of global sales, marketing and service, Jim Schroer renewed Celine Dion’s contract to the tune of $14 million for more artsy-fartsy, cutesy, low-key image commercials.

If brains were dynamite some people wouldn’t have enough to blow their nose.

Maybe this isn’t the first time he’s had to assume the position but now enter Joe Eberhart, a German national who has actually owned and operated car dealerships in New York. Following the polar-opinionated perceived non-functional ineptitude of the Schroer regime, I am sure Joe has his hands full. I hear there are more worms crawling out the woodwork every day.

The biggest single flaw I perceive in the Chrysler plan is their dogged infatuation with Project Alpha. There’s nothing fundamentally wrong with the project Alpha long-term reorganization strategy, as a matter of fact it makes a lot of sense. It’s just a bad idea right now when there are other more pressing immediate priorities. It ain’t gonna fix their problems in the near term.

Project Alpha wants to accelerate mergers of existing dealerships to eliminate dualled franchises in Chrysler showrooms. Remember, according to factory press releases Project Alpha was allegedly born in September of 2002 but If you’ve followed my columns back in July of 2002, I was all over this thing...long before this issue was on the radar screen, I wrote the following...

A Great Fall Dealer Magazine July 2002

One overwhelming theme I am hearing from all of the manufacturers is they are aggressively looking to reduce the number of dealerships. Of course, the Germans are a little less subtle about it. Two years ago I wrote an article titled “Mayhem in Mayberry” where I discussed the manufacturers desire to get rid of small town under performing dealers. Well, it really came home last week as one Chrysler executive was relating a story about a recent meeting with one of his top German counterparts; The Germans want to reduce the number of Chrysler Dealers to 2000 nationwide. They envision 2000 high-volume Five Star Certified dealerships.

The Germans are openly upset with low-volume small town dealers. The idea that there are franchised dealerships selling less than 50 or 60 new units annually is not acceptable.

I have often told small town dealers in my state convention keynote speeches... “You have two choices...grow or die!” Although these mergers, sales and acquisitions are allegedly voluntary, I can see where there a potential to turn the screws if a dealer doesn’t cooperate with the program. The Chrysler group is looking for dealers to make a substantial investment in facility and lost revenues from the franchises they have to abandon or move to stand alone showroom locations.

One article I read regurgitated the same old tired cliché about the Chrysler Alpha initiative... “The goal is to create large, profitable dealerships better able to boost sales and satisfy customers.” Aren’t we all getting a little sick of manufacturers bludgeoning their dealers unmercifully with the hidden agenda smokescreen excuse that it’s really all about customer satisfaction.

Like I said...Project Alpha makes a lot of sense, especially if you are fortunate enough to be one of the large market dealers that qualify. I am only questioning timing and priorities. I think Chrysler’s recent marketing performance is strong evidence I am on the right track.

The most incredible absurdity defying logical explanation is Deiter Zetsche saying they are going to aggressively look for ways to cut another billion from manufacturing and production costs. He can’t even quantify where he would make the cuts... “We’re just going to slash another billion out of our costs.” No wonder they’re swirling down into the toilet.

I predict Schremmp will feel increasing pressure from all sides as Chrysler losses continues to drag down Daimler-Chrysler equity. The parent company’s profits are down more than $4 billion over the same period last year with net income off more than 90%.

The headline in the Snooze read...

Mitsubishi slashes earnings outlook for year by Yuzo Yamaguchi
Automotive News / July 28, 2003

The first paragraph told the entire story...

TOKYO - Hit by credit losses at its North American sales unit, Mitsubishi Motors Corp. last week slashed its earnings estimate for the year by 75 percent and said it expects to fall deeply into the red for the first half... It forecast a net loss of $674 million for the first half ending Sept. 30.

Allow me the luxury of quoting myself from last month’s article,

The Barbershop Mirror Dealer Magazine, July 2003.

...Interestingly enough, another article appeared almost simultaneously in the Wall Street Journal saying that Mitsubishi Profits tripled over the last fiscal year.

“Mitsubishi Motors reported that its profits for the fiscal year (ending March 31^st) tripled to $317 million as cost cuts and growing sales in North America offset its money-losing Japan operations.”

Remember I said this...if it’s warm and stinky and it smells like bullcrap...it’s probably bullcrap. We’ve got dealers shutting down their floor plan accounts...reportedly so the factory can’t shove any more unwanted units down their throats and we’ve got a reported 120-day inventory supply on the ground nearing year’s end that ain’t moving...and we’ve got estimated huge finance losses in storage at 120% of invoice...apparently sitting on a large loan portfolio peppered with some of the worst credit criminals on the planet driving Mitsubishi cars for free for up to a year. We’ve got monster multi-thousand-dollar hits every time one of their repos go across the auction block...Money bleeding out of every artery...we all see it every week...everywhere...it ain’t a big secret. AND somebody in Southern California has the cajones to claim they are profitable? AND, they are now forecasting bigger (ridiculous and incredible) growth and profits?

Just my opinion of the facts as I interpret them to be but evidently the rats are cornered in the dead end of the maze with nowhere left to turn and no more tricks up their sleeves. Mitsubishi executives have shredded all semblance of credibility and illusions of competency. This is the stuff Dilbert Cartoons are made of. If they were Japanese guys instead of Canadian ex-Saturn execs, they’d be honor bound to go off into the garden and do that little thing they do with the knife in the movies. I wonder if these people are even in touch with the real world enough to realize they should be humiliated and disgraced. Of course Daimler-Chrysler must be thrilled they own 37% of Mitsubishi. That’s the way I see it anyway, I might be wrong.

Get this; you know I broke this story first, months before it popped up in anyone else’s magazines. Initially, they were in heavy denial...Now, according to multiple articles in the mainstream press as well as industry news, Mitsubishi will be forced to take a one-time charge off in the first half of $416.7 million because of credit losses in their U.S. operations. This follows a $300 million charge off they just suffered to cover credit losses last year. Excuse me, I ain’t no Canadian Ex-Saturn guy and I certainly don’t have great hair but I can do a little math. Double check my figgers here...Has Mitsubishi written off more than $700 million in credit losses according to every article in every publication in and out of the industry?

Whoa...whoa there big fella’

Isn’t that exactly what I said in this magazine nearly four months ago when they were hotly denying the severity of it whilst they were trying to cover their tracks? Guess what fans...we ain’t seen the end of it by a long shot. They have more losses in storage as loans mature and continue to default. There are more surprises coming from those lovable guys and gals at Mitsubishi...at least one big story that should break in about two weeks (written August 5^th) if they can’t keep the lid on it. I still have deep sources.

 Ruh-oh...The honorable Japanese CFO of Mitsubishi, Mr. Keiichiro Hashimoto appears to be a little more than pissed off as he reportedly said "North American operations continue to be a drag". Mitsubishi Japan apparently lays the blame for these monumental losses squarely on their North American Management Team.

Okay, enough Mitsubishi bashing for a moment...let’s look at something positive they’re doing in their marketing campaign for the new Endeavor.

One article I read said that Greg O’ Neill, president of Mitsubishi’s sales division, blames the Iraq war and “macroeconomic factors” for the lackluster (as in it sucked big-time) launch of their new Endeavor, hope of the future, SUV.

So, what are we going to do about it...well we’re going to use “SpongeBob” music in our Television spots of course. You’re not familiar with “SpongeBob” you say. You are too old to be a Mitsubishi targeted customer then.

Don’t you ever watch Nickelodeon on cable with your three year-olds or your grandchildren?  SpongeBob is a cartoon character who really is a “Sponge”...you know, a square acrylic sponge like you use to wash dishes, only cartoon SpongeBob has a face and talks and walks and sings and other  stuff like a real person. SpongeBob attracts the same age demographics that Captain Kangaroo and Howdy Doody appealed to for past generations.  Well those savvy executives at Mitsubishi have actually used “SpongeBob’s” new theme music titled “Square Pants” in their new ads. And, I’ll bet some of you may have incorrectly thought these people were stupid, out-of-touch or incompetent didn’t you? Most of you people never would have thought to use the “SpongeBob” theme music in Mitsubishi ads. That’s why these guys and gals make the big bucks and have the attitudes. One article I read focused on the fact that Mitsubishi was targeting younger buyers. You may have noticed some of the new tricycle parking spaces outside of Mitsubishi showrooms.

Honda Excell

Letters, phone calls and emails keep pouring in. I personally believe Ford dealers were never as pissed off about Blue Oval Certification as these Honda dealers, managers and employees appear to be about this debacle.

Talk about factory arrogance... in a recent memo to Honda dealers nationwide originating from Richard Colliver Exec VP and cosigned by John Petas Sen. VP, Parts and Service division...they said in part... You have embraced this cultural change as evidenced by the high level of Dealer Validation Process Workshop Attendance and your strong pre-Validation efforts. Excell is our future.

What are these guys smoking? The only embrace Honda dealers have for this program is that most of them I have spoken to would like to wrap their hands around somebody’s throat...tightly.

Well, let’s see if you Honda dealers have the testicular fortitude to stand up for yourselves on these issues. I have never dealt with so many people who were so intimidated by their manufacturer and afraid to make waves. I get your angry letters but please don’t use my name. Squeaky little voices...are you mice? Excuse me guys and gals...they can’t sell em without you.  If you don’t face them down on these issues and scream bloody murder, then you are a bunch of spineless whusses. You are on the edge of losing your right to manage your dealership and determine your own corporate destiny. I suggest you might start making some loud angry noises and start rattling your attack attorneys instead of lying down and taking it. This is not about customer satisfaction; it is about domination and control. (Opinion based on the fact that I am a decent ethical honorable thinking rational person)

One part of the memo that really puzzles me was the part that read... Your Honda National Advisory Board will be involved in the development of this policy.

Okay let me ask you a question...does your National Advisory Board represent you, the dealers, or are they just rubber stamp Judas Goats pimping for the manufacturer? I really don’t know the answer to that question; I certainly don’t know these folks. This is not judgmental; I am just asking are they effective or powerless or hand-picked zombies on a mission? What I’m saying is that if they actually do represent you, are you getting the message through them to your manufacturer and does the manufacturer actually care? It may be time to get angry, organized and represented.

This article has been three days in the making and I am still rewriting parts of it. It is now Tuesday morning as I get into wrapping up what I started Sunday.

Swirling a snifter of Remy Louis XIII in the lamplight...I always feel that satisfaction as another article winds down. There were so many things to write about and I had to choose amongst them.

Tomorrow is going to be another exciting day as I set goals and develop my business. Even though it is late, my spirits are still soaring.

I am chuckling to myself as I recall something that happened at the Oregon Automobile Dealers Annual Convention where I was the keynote speaker about six weeks ago. On this particular occasion I was traveling with my associate, Becky Chernek, who teaches our F&I Menu-Selling Seminars...we were both speaking on the platform. As we were leaving the dinner the night before a voice called out... “Jim...Jim Ziegler!” A man ran outside and he and I embraced and slapped backs, laughing and cutting up. We spoke for a couple of minutes and then Becky and I left.

“Who was that?” she asked.

“Oh, that was Sid Deboer, president of Lithia.” I said.

She just looked at me in amazement as we drove toward the hotel. “What’s the matter?” I asked.

She said... “Do you realize how many people are begging just for a minute of his time? And there you are back slapping, laughing, joking and trading headlocks and noogies with him for ten minutes.”

You see folks...that’s what it’s all about...the relationships are everything. It’s all about the people. Sid and I are friends whether we ever do any business or not, there's no agenda. Like I said in the beginning, so many of you have become a large extended family...Damn it’s its fun being me!

This Man Means Business!