Automobile Dealer Magazine

Dealer Advocate: The Way It Ought To Be

by Jim Ziegler

Independence Day... 4th of July, just sitting here on the deck watching my little boy play with the dog in the yard below. My Labrador puppy now weighs sixty pounds and Zach is almost eight---Twenty years in the car business, what hair I have managed to retain is graying and my travel schedule, speaking engagements and consulting is overbearing as I approach my fiftieth birthday this year.

As I stare down at the word processor in front of me, I know what I am about to write and---truthfully---It doesn't bring a lot of joy to me.

In recent years my articles have been debated and attacked by the left wing element of the auto industry---especially those pseudo-intellectual granola-eaters at the big automotive propaganda publication in Detroit. Factory reps and industry hacks have lined up over the years to vehemently deny trends that I have predicted and they have labeled me radical because I refused to march into the sea with that pack of lemmings they hang with. Well, truth is truth, and history tells no lies. My predictions over the last decade have been deadly accurate---I'm batting 1000. Read the articles I wrote ten years ago about the factories' plans to eliminate their dealer body and replace dealers with public corporations. At that time, I was skewered and barbecued---I lost factory business for advocating the dealer's side.

Some of those articles I wrote in Auto Age Magazine back in 1987 drew a lot of criticism from some industry heavyweights and I was dropped under pressure.

Recently I read the disturbing report that Oldsmobile took a 30% hit in the first quarter of this year when most of the other franchises posted record sales increases---I believe Chevrolet was up 17%. I have had a ball writing about some of the outright goofy marketing strategies we've seen coming out of Oldsmobile. I can remember a time when Oldsmobile Dealers made fun of Dodge Dealers. Now the factory sponsors retreats in the woods where gray-haired dealers commune with the little forest creatures and fall backwards off platforms hoping their aging peers can catch them.

Of course, the One-Price Oldsmobile strategy is bombing miserably and dealers are angry. So now Oldsmobile announces that in 1997 they are coming out with two window stickers---one with retail price (which restores the dealer's profit margin) and another with the dealer's "no-haggle" price ( which takes it away again). Why can't these people just admit their experiment failed. Last week, July 1st edition of the Wall Street Journal---staff writer, Oscar Suris wrote---"Ford Motor Company is taking its foot off the gas on lease deals and shifting more of its marketing dollars to good, old fashioned cash rebates."

Wow! The Wall Street Journal has a big blurb about Ford getting out of the leasing business. When I first wrote about that over a year ago---in the May-June 1995 edition of this magazine and then again in the March-April 1996 edition when I said, "And Ford didn't back out of the leasing business---they moonwalked backwards across the stage in a fashion that would show up Michael Jackson,"I was attacked and barraged with the cries of training companies and indignant industry hacks as well as those solemn, stony-faced factory executives calling me a crack-pot. They were denying what I knew to be true. Thank God that, as always, history comes to my defense.

Newsflash---Look for Ford to go to three-year leases on any programs they might have in the future. The two-year lease is dead. Wonder what that means for "Half-a-Car"---maybe they'll change the name to "Two-Thirds-a-Car"??? Remember where you heard that.

Ford took a bath when they started believing their own propaganda directed at their dealers. There was some mythology being taught that if you leased all these cars, the people would come back and lease again---and then you'd get more and more and more customers away from the other manufacturers and eventually Ford dealers would sell all of the cars and everyone else would go bankrupt---you'd see 68% lease renewal. The public didn't play though---I wonder who told you that was going to happen? That math only works in AmWay meetings. The public does not have brand loyalty nor dealer loyalty...wake up and smell the coffee. As soon as the subsidies stopped, leasing dried up for Ford. The losses are monumental because they are stuck with managing and administrating the disposal of all these vehicles---much of it at a loss.

With 3.1 million late model used cars hitting the market all at once as opposed to 1.7 million last year---why do you think all of these Used Car Superstores are slobbering over the marketplace? Now, with the glut of used cars coming on the market following the leasing experiment---("CarMax is coming!"), everyone is shaking needlessly. CarMax only wanted a Chrysler franchise to get to the auctions (my opinion). All of these Superstores are going to totally ruin the retail market for about two years, especially on new car sales, and then they are going to disappear in a puff of smoke after they have scorched the Earth and done irreparable damage to the industry.

Five years from now I want everyone to remember that I said this way back in 1996: "All of those CarMax lots and those other so-called used car superstores are going to be big outdoor skateboard emporiums by the end of 1998."

The CarMax store in Atlanta, not two miles from my office, has nearly a thousand cars on the ground---and they are under more water than the Titanic. I heard that they lost seven and one-half million in the first quarter. Wait until they have to start cashing out of losses stored in the inventory that's on the ground. These guys are not competition. Don't emulate them---go after them.

I will be attending a Used Car Symposium for dealers at the Watergate Hotel in Washington in September. If I end up speaking at that forum---once again I'll be going against the grain, saying "H. Wayne Huizenga had better stick to renting videos cause he's about to get his ass kicked in this business."

When I spoke at the NADA convention in New Orleans in 1993, there was a frothing at the mouth furor over the coming "One Price Phenomenon." The propaganda machine started pumping out bogus statistics and articles in "Automotive Pravda" about the public mandate dictating "One Price Selling." The factories bought in and more than 10% of the franchised dealer body went to "One Price Selling." At my own expense, I personally mailed out to dealers and industry executives over 18,000 copies of a soft-bound 25-page thesis I wrote about why it was going to fail. By the end of that year more than 76% of the 10% of the dealers that experimented with that goofy concept were back to traditional sales. It doesn't work. Still the factories are hanging on to "No Haggle" even though I have heard that one manufacturer's secret internal research shows that only 18% of the public accepts the concept.

The point is---I work in dealerships with real customers every week of my life. Some of these manufacturers have been working overtime with "in-their-pocket" industry publications and "unbiased-criteria challenged" surveys---dissemina-ting so much bogus information to the dealers for so long that they've started believing their own propaganda. Even though I have been a top-rated speaker at three NADA Conventions and more than twenty State and Local Dealer Conventions and more than seventy dealer twenty groups, I am too controversial for the NADA, still licking its wounds after limping off the battle field in the price-fixing fiasco. Most of the voices of sanity in our industry have been drowned out by the special interests. Oh well---It's Fourth of July---I've got chicken on the grill here---sipping on a Long Island Iced Tea---beautiful home and a wonderful family---and---uh-oh---gotta go! Damn Labrador's digging under the fence again.

Jim Ziegler is President of Ziegler Supersystems, Inc., in Norcross, GA.