Caught me, didn't you? You're absolutely correct. For the title of this article I have selected part of the five-year mission statement from the Starship Enterprisenot surprisingly, an event that also takes place in the twenty-first century.
Sitting here staring at the keyboard on my word processor, my thoughts are beginning to crystallize into a clearer vision and words begin to materialize on the screen in front of me. "Beam me up, Scottie!" This is one of those special events that, back in the sixties, might have been referred to as a "flow of consciousness."
Thirty years of marketing expertise salessales management and advertising has brought me to a point where I have to rethink everything that I have done and taught over the course of my career.
In the movie "Back to the Future", a collection of well-meaning fools interfered with the "Time/Space Continuum" and created shock waves that had disastrous effects as they rippled into the future.
In the retail automobile industry, we're also experiencing monumental changes for the worse. The changes that are currently taking place in our industry are not good for anyone, not for automobile dealers and not for the manufacturers. These changes are certainly a disaster for the retail public.
Appliance hawkers, cookie wholesalers, video store and waste collection wizards, inbred factory droids, and now, legislators and state Attorney Generals have been experimenting and tinkering with a system that, truthfully, wasn't broken.
If you've followed my articles over the last ten years, I have chronicled and predicted with laser-sharp accuracy every failure and misstep these alleged "revolutionaries" have made. However, the fact is, like it or not, the landscape has changed. The latest changes in the truth in lending laws, specifically Federal Regulation Z, are going to immediately affect the way that we retail automobiles.
Let me make one thing perfectly clear hereI don't like these changes any more than you dothey hurt the consumer and the dealer. BUT, we have to deal with the issues, and the main issue today is "compliance."
Negotiation has been in virtually every culture on the planet since before recorded timeeven before the time of Christ. It is not illegal, criminal, or dishonorable. As a matter of fact, the procedures to limit dealer's profitability that some of the Attorney Generals are advocating resemble a political system created by Karl Marx. Excuse me, folks, in the United States of America, we are capitalists and that is not a dirty word.
If some of you political liberals ever want to relocate from the "land of the spotted owl" to a place where you would better fit in, I know a number of car dealers who would gladly chip in to buy you a ticket to Cuba, where you might feel politically more at home.
In the negotiation process, the vendor starts high and the buyer starts low and you end up meeting somewhere in the middle. The public has overwhelmingly cast their vote with every reputable research firm in the universe that they prefer negotiation to get a better price.
There are however, those that represent the intellectual elitethe politiciansthe factory executivesWall Street opportunistspublishers and editors of certain industry publicationsand questionable research firms who are dead set on forcing changes in the industry that no one really wanted. These people are, in my opinion, more screwed up than a pile of coat hangers.
Nevertheless, I have to concede that the time has come to reconsider and redesign the way that automobiles are retailed. Now, don't lose your lunch here. I have not sold out, nor have I stepped over to "the dark side". Read on and you will see I am still the same old Zieglerso relax!
Ideas that I am about to express to you are not new. As a matter of fact, if you will review the speech that I made at the 1993 NADA Convention in New Orleans, you will see that I have been working on this concept for more than seven years. In that presentation, I said that by the millennium, the year 2000, retail automobile dealerships needed to consider a selling methodology that totally eliminates the sales manager and the F&I manager positions. These departments are rapidly becoming obsolete.
Now, with recent changes in "truth in lending," dealers are going to have to formulate sales processes that control the way that payments and rates are disclosed to the customer during the sale. No, I am not proposing some goofy, "no-haggle" nonsense.
In recent weeks, my staff and I have been feverishly rewriting all of the sales procedures that we teachagain. I am currently in the process of authoring and redesigning the sales process with new "word-tracks" for salespersons and managers as well as new negotiation procedures.
Certain state Attorney Generals are going to start prosecuting (persecuting) and fining dealers for not disclosing interest rates to the customer at the time the payment is presented, even though we have no legal right to pull the customer's credit file to pre-qualify them, according to the new Federal Trade Commission clarifications. We are, in effect, "Damned if you dodamned if you don't."
It has been ruled illegal to quote payments to a customer that include finance products such as extended service agreements and credit insurance, etc. "Payment packing" is becoming increasingly sensitive. If your people are quoting "packed payments" to the customer or unrealistically high payments, terms and rates, you could be facing fines and prosecutions and class actions in the hundreds of thousands of dollars of exposure.
Unfortunately, these are the accepted negotiating processes that most dealerships have taught and used for decades.
Regulation Z, as amended, now says that you must declare to the lender and itemize any portion of the loan applied for that will go toward covering negative equity in the trade-in. This law alone has been a nightmare of misinterpretation with almost every bank and state putting their own twist on compliance.
Some state Attorney Generals have issued guidelines defining their interpretations of what constitutes "deceptive trade practices" in the negotiation process. Dealerships that quote artificially high payments based on 36-month terms and inflated interest rates could find themselves fined or prosecuted.
One of the most profound quotes ever attributed to me is"Average people with great procedures can do incredible things." Sometimes I amaze myself. That statement literally means that I believe that the "sales process" is more important than the whims of the individual "superstar."
The long and short of it is that I am advocating that we abolish the sales management and the F&I management positions. Actually, these positions should be merged. I am talking about fully cross-trained managers who are capable of performing every management function in the front-end operation of the retail automobile dealership.
Currently, I know of several highly successful dealers who are experimenting with variations of this concept. I have been in close contact with them as they bring these processes to reality.
I am picturing fully cross-trained "hybrid-managers," capable of negotiating the entire deal, front and back, selling all products in one sitting, face-to-face with consumers, never getting up from the computer until the deal is done and contracted. In some larger dealerships, we might be talking about four or five teamsone manager for every four salespeople and one additional manager whose total responsibility revolves around getting deals approved and paper bought at the banks. I am still thinking about used car specialists and special finance managers in the equation.
As radical as all of this might sound, I think it is going to be an extremely reasonable, profitable, and customer-friendly process. It will certainly eliminate the back-and-forth negotiation procedures we have traditionally taught. The most important element in this process is that it takes salespeople out of the negotiation. It will eliminate the risk that the salesperson might quote a payment or interest rate or pack payments or any of the other long-endured habits that legally expose the dealer.
In the new process, the salesperson's total responsibility would be the selection and demonstration procedures. Still in the experimental stages, we are still in the experimental stages, working out the details and the logistics for different dealerships. But I am confident that, "This is the way." Some dealerships will require "finance secretaries" and additional "support people" to implement the process. It is still on the drawing boards.
Of course, most dealerships are still heavily invested in traditional negotiation procedures and we have to continue to work on consumer-friendly, legally acceptable ways to do business within the framework of the salesperson and manager, back and forth, negotiation. Those of us in the training industry are working overtime to be sure that our training teaches dealers and their employees to operate legally and profitably, in the spirit of the law, and, more importantly, in the spirit of creating a consumer-friendly, legal selling process.
In the meantime, I strongly suggest that you review your processes and examine your sales procedures to be absolutely sure that your dealership is operating within the guidelines of current laws and state Attorney General's interpretations of what constitutes "deceptive trade practices."
As for me, when you read this I'll be out there somewherespeaking at a convention or performing a management seminar in some hotel. Maybe I am sitting at bar in some distant airport, swirling a snifter of cognac and chuckling out loud as I ponder this great human comedy.
More Food For Thought
· I have said many times in this magazine that I look forward to the day when CarMax lots become big outdoor skateboard emporiums. Well, sports fanshave you seen CarMax's stock prices lately? The dictionary definition of the state of that company's stock value is"In the Toilet." About two weeks ago CarMax stock bottomed out at just slightly more than "3 _" dollars a share. My little boy and I showed up at the CarMax in Norcross early Sunday morning with our skateboards. We were wearing baggy pants and tank tops, hats turned backwards, elbow-and kneepads with our helmets in hand. Much to our surprise, they still hadn't taken the cars away. The security guy was not amused and asked us to leave. Oh well, we'll try again next week.
· The Devil Made Me Do It. Don't ask me why! I was sitting in my office last week fooling around with my Charles Schwab account and I hit on this crazy idea. Before I knew it I had actually bought several thousand shares of Republic Industries stock. My reasoning was pretty soundbuy low, sell high. Well, I worried about it all weekend. Then, I sold it this morningat a nice profit. Oh well, that's what I call a walk on the wild side.
Jim Ziegler is President of Ziegler Supersystems, Inc. If you have specific questions or require more information about this subject, please check the appropriate box on the reader response form on page 3.