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Anxiety...Weathering the Storm

By James A Ziegler, Dealer Advocate

 October 2004

It is 6 o'clock Tuesday morning...the first day back to work after Labor Day weekend...and as I write these words the remnant of what was Hurricane Frances is stalled right on top of my house. Even though it is no longer a hurricane...we're calling it a tropical storm now...its winds are howling outside my window, gusting to 60 mph...Trees down and power outages city wide. I walked out onto the back deck a few moments ago and the rain was coming down in torrents, blowing sidewise with a stinging force. This thing has now blown into town and is parked squarely over Atlanta.

All weekend we've been watching it on CNN...it's real ugly. One month after Hurricane Charley beat the hell outta those poor people in Central Florida, here comes another one marching slowly through the center of the state...ripping people's lives and dreams apart. Excuse me...did I mention that CNN is now reporting that another powerful hurricane, Hurricane Ivan, is in the Caribbean tracking the same course as the other two?

Just three days ago I was working in-dealership, training and consulting, with the Eddie Accardi dealerships in South Florida when I received a call from Delta Airlines informing me that it anticipated evacuating all aircraft from the Ft. Lauderdale airport before Friday. In other words Ziegler, if you don't get the hell outta there tonight, there's no alternative other than to ride out the storm in a hotel or local shelter. The salespeople and managers were also visibly distracted...let's face it...there's this real big bad-ass, Category 4 monster hurricane bearing down on you...it's approximately the size of the state of Texas, Hurricane Frances...you really need to be boarding up your house and evacuating your family to the center of the state...but you're stuck in a sales management seminar with Jim Ziegler. I couldn't blame them...I was also in a highly agitated mood to flee.

On the last break of the day I called Joey Accardi on my cell phone: "Hey look Dude, I think this thing's gonna get outta control real soon. If you don't mind, I think my employees and I would like to book the next flight outta here...okay?"

Of course, as always, Joey Accardi was on top of business, and without hesitation he said, "No problem...Call me after this thing blows over and we'll reschedule next month."

Since caveman days...science only recognizes two true motivating emotions...flight or fight. In other words... when you're faced with a challenge in life you can choose to either haul ass or stand your ground. In this case of Hurricane Frances...I chose the former option. We were on the earliest possible flight back to Atlanta.

Did I mention that I have a sales manager seminar scheduled here in Atlanta tomorrow? Cancelled consulting projects and cancelled seminar attendees...I estimate Hurricane Frances has already cost more than $75,000 personally. Life's a bitch isn't it?

So what!

Now, I am concerned....that's not the issue. Believe me, I'm not running around singing... "Don't worry, be happy." The point is, when you're faced with adversity...deal with it.

Personally, I am sick of dealing with defeated dealers who have given up. The business is tough right now and there seems to be an endless progression of new challenges, one right after the other. The reckoning has arrived as I have been warning for the last couple of years. We are facing a saturated market with a glut of inventory caused by reckless over-production by manufacturers at war.

As always, this too will pass. The sun will shine again and we will repair the damage and move on with our lives and businesses. You can choose to be a casualty or a winner. My best advice is to get your processes in order and make sure your sales operation is professional and aggressive. You can't afford to be wasting any opportunities to do business.

In the words of my friend, Larry Wingate, "Stop whining and get a life."

I've seen all of the statistics and all of the projections...I've read all of the J.D. Power and Associates future forecasts and other assorted fiction...the bottom line is that you are the master of your own destiny.

Reciting some classic Zieglerisms... The best way to beat the competition is to ignore the competition. My personal belief is that I could make multi-millions with any franchise...in any market...regardless of the strength of the competition. Location is secondary... there's no big dog in any market that you can't defeat. Superior product will always be defeated by a superior sales presentation....promotion always is superior to advertising... and...there's nothing on earth you can't sell your way out of.

August really sucked
Remember, I am writing this in the beginning of September. Looking at sales statistics for the month of August, everything was retro...as in... August sales bit the big one. Chrysler was up 32.6 percent and Mitsubishi lost 60.8 percent market share...everyone else was somewhere in-between. Whoever does those seasonally adjusted bogus annual sales rate projections is projecting 16.0 million new unit sales based on August results...remember they were tracking 18.1 million new units sales based on July rate of travel.

Excuse me...time out here for a minute...Just how in the hell does that work anyway?

Let's take a look... in July, some alleged fools said that, statistically, we were tracking 18.1 million unit sales and now, in August, we are tracking only 16 million new unit sales. Does that seem bizarre to anyone else besides me? Where do these numbers come from? Are these J.D. Power statistics? (That might explain the mystery.) The articles I've read didn't quote the source. Regardless of who authored these alleged statistics, I think you'll have to admit, these numbers appear to be pulled out from the deepest, darkest recesses of the statistician's anatomy...don't they?

Here's the way it apparently shakes out...in reality.

Yes, Chrysler was up 32 percent but is this just another "One Trick Pony?" The plant is on overtime producing Hemi engines. I am cheering loudly...standing here in my underwear applauding wildly because these DaimlerChrysler guys (gals) have knocked a home run out of the ballpark...and, as I have always predicted, this revolution is product driven...as opposed to accounting manipulation and cost-cutting.

Nobody's cheering harder for DaimlerChrysler than I am.

The Germans are unleashing a rapid-fire introduction of inspired new product that has captured the market. Going back to the roots of muscle-car Americana...the brand equity excitement associated with the name "Hemi" has rekindled a latent sleeping desire for excitement and adventure the heritage suggests.

The significant analysis of the statistics points to the Japanese...it appears that Toyota and Honda...the Japanese manufacturers in total...saw declined sales of nearly 13.5 percent. Comparing this to North American manufacturers (DaimlerChrysler included) losing only 12 percent...this is a number possibly reflecting a slight paradigm shift.

I was writing about it three, four, even five years ago; and now, it's out in the open. The Japanese agenda is clear and defined...the goal is the destruction of Detroit...they are taking down the US auto industry. Honda and Toyota are the aggressors. It is a scorched earth battle based on over-production.

Who is picking up the pieces, you ask? It was and is the Koreans of course. As I have repeatedly predicted and highlighted in previous articles...the Koreans are in the attack mode and, the Japanese are vulnerable. The Koreans are coming in strong like the storm that has been building strength offshore... and now they are wreaking havoc with the balances in the market. These guys showed up wearing their game faces.

Unfortunately...Ford Motor Company sales have fallen beneath the radar screen. If I were a Ford dealer, I'd be mad as hell. Tears stream down my face when I see what these alleged fools have done to this magnificent company. Trailing behind General Motors, Toyota, DaimlerChrysler, and Honda...In my opinion, Ford Motor Company has cost-cut and accounted itself into the toilet.

The good news...Toyota's new prodigy, the Scion, has more than a 700 percent increase in sales month to month over the same month last year. Every publication I read has similar accolades touting Scion's successes. But...one thing I noticed is all of those reports are quoting percentages...not sales statistics in units. It is no secret that I think the car is butt-ugly and ill-conceived, but I also believe there is a concentrated marketing effort aimed at Toyota dealers hyping the product with creative numbers.

Excuse me...if Scion is so great, why aren't Toyota dealers who are friends of mine telling me the same story?

Okay...700 percent increase in sales... from startup until now...okay, I'd be embarrassed if the number was anything less. But...are those numbers significant? Is the industry socialist media in cahoots with the manufacturer here? I think the answer is most definitely...absolutely...no doubt. The keyword concerning media reports about Scion sales is "hype." In the words of the late Clara Peller, "Where's the Beef?"

Scion...my dealer friends are telling me...no gross...stupid sales concept...distraction... stealing sales from existing lines to a cheaper, less profitable unit...and...not selling to the alleged target demographic...like the Honda "Elephant," the Scion is selling to a much older demographic than the original Generation Y prediction. In other words, are we scabbing sales away from Corolla and Civic, converting customers to cheaper, less profitable units? Zero grosses...more headaches.

So...the question is...is Scion just another goofball concept headed by out-of-touch, happy-clappy, warm and fuzzy propeller heads or is it a stroke of genius? Guess what I am thinking?

Toyota is an incredibly great manufacturer. Dealers are happy and, it appears the factory really makes every reasonable effort to see that its dealers are profitable.

In other stupidity...did you see where Ford Motor Company announced it was cutting back production of Jaguar cars because of sagging US sales? We're talking, approximately, a 15,000-unit cutback between now and the end of the year.

Mismanaged, no leadership...lack of vision...unimaginative product... excuse me folks while I search for more negative adjectives to describe my opinion regarding the perceived incompetence at the highest levels leading to Jaguar's sales declines. The Premier Automotive Group (Jaguar, Aston Martin, Land Rover, and Volvo) lost more than $360 million in the second quarter as opposed to a profit of $166 million for the same period last year.

The company is citing weakness of the dollar and a highly competitive market as the reason for the dramatic sales decline...on the other hand...Ziegler is citing weak management, lack of innovation, flaccid leadership, clue-impaired accountants at the helm, as the real culprits. Of course, I could be wrong.

On the other hand, however...Volvo dealers are telling me that, all of a sudden, the manufacturer has awakened from a drug-crazed sleep and this franchise is, once again, highly profitable and dealer-friendly. Like I've always said... "It's the product...stoopid!"

I have watched in horror as other manufacturers wasted valuable brand equity nameplates on uninspired cars and trucks. Most recently, General Motors wasted one of the most valuable names in the vault on a mediocre jellybean design from Australia... calling it a GTO. I watched Ford hang the nameplate Marauder on a less than inspiring Mercury Grand Marquis with a little extra black paint.

There are still nameplates in the vault with tremendous equity and sales power...what if Chrysler brought back the Hemi Cuda or if Chevy reintroduced the Stingray? The Chrysler Imperial? How about the Buick Wildcat? The Boss Mustang?

On another hand...when you think about total absence of brand equity, Saturn has to be right up there amongst the top contenders. We're talking about a company that, by its own admission, has only been profitable one year since 1990 (and I question that). As of July of this year, Saturn sales were down (again) more than 21 percent over the same period last year. We're talking about a company that has lost nearly a billion dollars every year of its existence. Mathematically, Saturn has historically contributed to approximately one-third of the revenue/profitability drain on the General Motors Corporation annually.

Originally, the dealers and the factory executives whined about lack of product...so GM gave them the newest, most advanced General Motors product...before Chevrolet or Pontiac or Buick...Saturn got the good stuff. Still sales suffered.

What's the answer? What the hell, let's sink another $500 million into the plant at Spring Hill and let's dump another $200 million into new product development. Yes, General Motors has made the decision to sink another $700 million into propping up Saturn...it'll probably end up more than a billion dollars...for what?

If there's anything Saturn has proven, it's that the concept doesn't work...and it will never work. Let's see here...we've spent $4 billion on the plant and we've lost approximately a billion a year since 1990...rounding off the numbers, that's roughly $20 billion loss in less than 15 years. How about we call in the accountants and we'll do a feasibility study here?

Okay...okay...I know...that's a little harsh on Saturn. The truth of the matter is that Saturn is going mainstream. Right now, my company is working with more than a few Saturn dealerships, coast to coast, teaching their employees how to sell cars and manage sales. Some Saturn dealers, evidently with the factory blessing, have turned to using sales and management consultants to train their management. It's a fact that most Saturn dealerships are now negotiating deals on their cars. A few months ago I wrote an article in Dealer welcoming Saturn dealerships back into the fraternity (sorority).

China Syndrome

Last month I wrote about the impact China is going to have on the US auto industry. Well...stop the presses...my previous predictions are already kicking into gear. I have said repeatedly that the Chinese (government) cannot be trusted. Now, all of a sudden, we are seeing China's automobile production falling by more than 20 percent year-to-year same period (July). As a matter of fact, production was down more than 22 percent month to month. Who's the culprit? How about the Chinese Central Government restricting credit and negatively controlling economic growth? What if we said that bank loans were down from 30 percent of sales to now less than 2 percent of sales?

All of a sudden we see all of the international investors and manufacturers who were clamoring for access into Chinese markets starting to moonwalk backwards a little...now we see these guys (gals) shaking their heads and second guessing the wisdom of trying to tackle this market. You could have read it here first and saved yourselves billions.

Ford follies

Well, Ford Motor Company is banking on the new Ford 500 platform to lift up the company. Sorry folks, I know it's a great car technologically, but I just don't see it. You can tell me how good it drives until the cows come home but still...still...it is unimaginative and uninspired. Is this what we've all been waiting for? And that name...the 500. Quit it. I am so sick of manufacturers giving cars names that are numbers and letters. I want a car or a truck with a real name like Escalade or Corvette.

But not Ford Motor Company; it has pinned the hopes of the future of the company on another (yawn) jellybean car with a number instead of a name. When I first saw the car at the NADA convention earlier this year, I was hoping against hope that it was just a preliminary model.

Okay...okay...I know it has the same platform as the Volvo S80...but...no matter how well it performs...or no matter how great the durability or quality...it's not impressive. Nobody is going to say I've got to run over to the nearest Ford store and get me one. Don't tell me how great it drives...tell me it is stylish, sexy, or manly and that it has some kind of social appeal. (It doesn't.)

Another mistake in the tubes...now we're hearing that these geniuses at Ford are thinking about using this same platform to build the next generation Lincoln Town Car.

Have you guys (gals) lost your minds...or what?

Your first monster mistake was when you originally downsized the current Lincoln Town Car to the Panther platform which is shared by Grand Marquis and Crown Victoria...that was a really stupid move and it cost you a lot of market share. Now, did you guys have a meeting or something challenging yourselves to come up with something even more idiotic to top your last moronic non-achievement? In a drunken stupor maybe was it some inept wet-behind-the-ears geeky engineer...or perhaps a young new-age MBA marketing guru that screamed out..."Hey dudes! Let's downsize the Town Car again?"

Ziegler to Ford...I love you guys. Why are you so totally out of touch with the real world? You owned this market category and you threw it all away due to this magnitude of off-the-Richter scale stoopidity.

On the other hand...I think the Freestyle Sport Wagon has a reasonably good chance to be a real winner. Even though it's built on the same platform and shares the same technology as the 500, the application is more realistic and in tune with today's consumers. Of course the new Mustang and the F150 are world-class contenders that will rock the market. There are some signs ushering in a return to sanity here. I believe Ford's back...and, in a few years, it will once again be a major contender.

Son of Blue Oval

Nearly four years ago we all became emotionally embroiled in a battle over Ford Motor Company's Blue Oval Certification program. I was right out there on the front lines, shoulder-to-shoulder with the dealers; in article after article I blasted the factory with both barrels...repeatedly reloading and firing again. Blue Oval Certification was never about customer satisfaction or anything resembling that. It was always (my opinion) about controlling, eliminating, and manipulating dealers... rewarding lackeys and punishing dissidents...and creating a revenue for J.D. Power and Associates. It was evil and corrupt from the conception through the implementation...and it still is. It certainly didn't do a damn thing to increase Ford's market share did it?

Excuse me...but I hope to hell that Ford does not hire J.D. Power and Associates to administer the new program. This is a test to see if the Ford Dealer Council really does have any cajones.

I am pleased to see Ford backing off and redesigning the program. Truthfully, the best redesign is to abandon it altogether. But, we all know that would be too simple for complex non-functional minds to absorb. With a few stellar exceptions, the incompetence pool among Ford's top management appears to run very deep. But, the idea of tying rewards into production goals makes sense...as long as it is voluntary and non-punitive.

Ford, General Motors and Honda...all of these manufacturers have recently taken their eyes off of the ball pursuing these customer satisfaction programs tied into monetary rewards. All of these programs are only a distraction and, ultimately, cause lost sales. Standards of Excellence, Honda Excell...the list goes on and on. What is it that inspires manufacturers to feel compelled to screw around with their dealers? None of these programs is worth a damn and all of them are destructive and counter productive. If anything, Saturn has proven that customer satisfaction has no relationship to profitability.

I have often said that customer satisfaction as a reason that a customer would do business with you again is worthless. People expect to be satisfied, they don't even notice when they are satisfied...they only notice when they are not.

On the other hand, customer relationship management is everything! A dealership's past customers are its best and cheapest source of new business. Every dealership that I have been involved in growing to the big numbers, CRM has played an integral, strategic role in the business plan. Sadly, most dealerships do not have a useable working database capable of managing past customer relationships...most DMS systems are accounting systems with no interactive fields.

Final thoughts

Four-hundred horsepower, smaller, lighter, and designed with laser-sharp lines - the new 2005 Corvette is world class. Remember in the movie Independence Day with Jeff Goldblum and Will Smith when they were first flying the alien's flying saucer and Will Smith said, "I gotta get me one of these!"

Right now I am driving a new 2005 Cadillac Escalade (got it last week) and a new Corvette...my wife is driving a new 2004 Cadillac SRX...and we have ordered my son, Zachary, a new 2005 Mustang GT (He just turned 16 last week). But...I've got a feeling that there's one of these new Corvettes in my future. It's going to be a little tricky talking the wife into letting me trade the 2004 in for a 2005 Corvette... but...what the heck, I'll figure out a way to get it done...I'll handle it.

Right now my personal calendar is full as far into the future as I care to look. Our automotive management seminars are filled to the walls and the retail automobile dealership consulting business is keeping four consultants and myself traveling 250 days a year. I still enjoy speaking to automobile dealer 20 groups and keynote speeches at state dealer association conventions... got Michigan coming up. And, California's convention next year has a hold date on my calendar. Call your state association and remind it that I am available to keynote your annual convention...and if I haven't spoken to your 20 group recently, ask the moderator to get in touch with me. Take a look at the incredible expertise Mike Roscoe has assembled to write for this magazine. We've got more useable, practical knowledge in every issue aimed directly at the working dealer. Get some of these writers in front of your conventions and 20 groups...we have a lot to offer.

I talk to a lot of dealers and many managers every day...every week...every month. And...yes, I know some of you are struggling. The answer is to attack the market, refine your sales processes, get your house in order...not to retreat and try to hunker down. These storms will pass. Cost-cutting only works once (look at Ford Motor Company as a pitiful example of an accounting-driven organization).

Sitting here now, swirling another snifter of vintage Louis XIII cognac, watching it circle round and round, it's almost as if I can feel the electricity in the air...a feeling of anxiety as we sit here waiting out the storm together.

If you wish to discuss this article with other dealers, or with the author, please go to the "Discussion Forums" at www.DEALER-magazine.com and enter the "Dealer Advocate" forum.

Jim Ziegler is the president of Ziegler Supersystems, Inc.
 

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