In the immortal words of Phineas Taylor Barnum, "There's a sucker born every minute."
As I sit here putting thoughts into words, it is already late into October and many of the events that I predicted in this column months ago, years ago even, are rapidly coming true.
If you ask a factory guy (or gal) who P.T. Barnum was they would probably say that he was a huckster, a con artist a scam artist. On the other hand, if you asked James Ziegler to describe P.T. Barnum, I would say he was the greatest showman who ever lived, a man keenly attuned to exactly what the public wanted and he provided it for them. In other words, Barnum was my kind of guy.
Twenty-five years in the retail automobile business has taught me one inescapable truth, manufacturers haven't got a clue about retailing automobiles. I often sit and marvel at the immeasurable and immense dimensions and the vast scope of the raw, unashamed stupidity exhibited with such conviction and arrogance by those whose failures are so colossal, catastrophic, predictable and preventable.
This morning Reuters released a shocking story that eight of the original thirteen dealers in the Salt Lake City Ford Auto Collection are withdrawing. Remember, those dealers were previously successful dealers before the Auto Collection. I guess they are getting out of this screwed-up mess before it gets any worse. I am not going to write a lengthy paragraph here telling you exactly how many times I correctly predicted exactly what was going to happen in Tulsa and Salt Lake City. You can archive my past articles for the last two years on my website at www.ZieglerSupersystems.com or go to the DEALER magazine site at www.dealeronline.com (click "back issues" under the cover of the last issue).
It was so predictable. According to the Reuters article, "Ford division truck sales at the Utah Collection were down 28.8 percent from last year when the stores were independent. Ford division car sales were off 13.3 percent."
On the other hand, of course, Butterfield Ford (negotiating dealership, the only holdout which didn't sell to Ford), was up nearly 30% month-to-month. One dealership obviously didn't absorb that entire lost market share that these thirteen previously successful dealerships lost at a time when Ford market share was up nationally. Nope, I think Dodge and Chevrolet ate their lunch. I think negotiating dealers had a field day with these guys and those (allegedly) goofy Excel 2000 initiatives they were implementing there.
One positive thing that the Ford Auto Collections in Tulsa, and now, in Salt Lake City, have accomplished is that no one will ever take alleged Ford factory training seriously again. I estimate that Ford Motor Company Executives have thrown more than 100 million dollars at Salt Lake City and Tulsa just to prove that they are expertsat running profitable dealerships into the ground. They tried every goofy, off-the-wall, one-price, no-haggle, Excel 2000, certified inventory, cheap hired help initiative in those storesand the result was the laughing stock of the industry. The next time some Ford representative wants to sign up you and your managers to attend some idiotic session where you wander around a hotel room blindfolded with a bunch of grapes on your head, you tell him where he can stick those grapes.
In October I was one of the featured speakers at the Automobile Dealers Association of Indiana's Capitol Cities conference in Indianapolis; 250 of their 499 franchised dealers were present. I shared the platform with Mike Maroone of AutoNation, Ross Roberts, MaryAnn Keller, now with Priceline.com, and Harold Wells, the incoming chairman of the NADA. The other speakers spoke about assorted topics. Among other things, I spoke about some of the other speakers.
Ross Roberts was in the audience during my presentation and I poked some fun at him. But I would like to say something here that I believe needs to be said. Ross Roberts is a fine man. Ford Motor Company owes Ross a debt of eternal gratitude for some of the great leadership he exhibited and for putting Ford Division back on the map in the nineties. I know Ross and I respect him regardless of the jabs and crosses I've thrown at him in these articles. He was one of the last real "Car Guys" to leave the building.
As for this Auto Collection debacleI really don't believe in my heart that Ross ever believed in any of this goofy concept, but like a good soldier, a loyal company man, he followed orders and accepted the responsibility. Of course, he wouldn't admit that even now. I believe this is one of Trotman's deals or maybe one of Bob Rewey's fast shuffles. Ross should never be remembered as the "Auto Collection Guy".
Now, all of a sudden, just when Ford has had their butt handed to them publiclyour buddies at General Motors are jumping out there and announcing that they are going to buy up as much as 10% of their dealerships and operate them. General Motors excuse me, are we talking about that same lovable wacky bunch who brought us the VOMS systems and other industry enhancements that have put their market share further and deeper into the toilet? Aren't these the same geniuses that can never quite seem to get cars and trucks that sell to their customers on time, if at all?
You're talking about the same company who threw away major market share while squandering billions of dollars of research and development money on Saturn. You say they're going to use that same razor sharp expertise and precision implementation to run dealerships? Better have a great Marketing Czar if you're going to pull off something that ambitious.
At the Indiana Dealer Conference MaryAnn Keller said that 300,000 cars a year out of 17 million units is hardly an industry-shaking revolution (or something very close to that). The sad part of this whole thing is that these people are just deluded and arrogant enough to believe they know what they're doing.
Listening very closely to statements made by Jack Smith and Jac Nasser, and quotes I am receiving from reliable sources allegedly made by that zany, fun-loving Ron ZarellaI believe they are all planning to put their dealers out of business.
If you listen to their words, especially in the BusinessWeek interview with Nasser and some of Smith's statements recently, they are referring to the dealers' role as being part of the retail distribution system and the delivery system. They are not referring to their dealers as being part of the profit or sale of the automobile, just distribution and delivery and service. Remember I said this"You're about to get screwed here, folks."
The only reason I feel confident that they are going to fail is that they have a well-documented track record. What bothers me is that the liberal press is taking this opportunity to do a little more "Car Dealer Bashing." I have read several articles reflecting upon how the consumers are going to win when the manufacturers shave as much as 25% off the price of the cars by selling direct to the public.
Excuse me; we have to educate the public. The retail automobile dealer is the only thing that has held prices down. If the manufacturers ever were to own all of the stores and control sales, prices would skyrocketevery car would sell for full price and increases would be shoved down the public's throat. Currently, dealers have held those prices in check and competition has been the fuel that sparked deals.
The other thing I hear is that the manufacturers are concerned about "Customer Satisfaction" in a way which implies that dealers are the bad guys. Once again, let me point something out hereIf anyone ever gets all teary-eyed over General Motors' concerns for customer satisfaction, please back up and remember they were just hit with a $4.9 billion judgment (since reduced) because they allegedly factored into the cost of doing business, approximately $2.40 a car, electing to handle the lawsuits stemming from survivors of product safety related fatalities. The main evidence was a memo written by a junior engineer in 1973, a document that several courts have accused GM of trying to conceal and suppress.
In a similar case in Georgia involving a fatality, a state court judge said in September, "In certain instances GM, by and through its counsel, toyed with and ignored court orders, ethical constraints and legal barriers." He also wrote, "Plaintiffs have exposed a shameful scheme by GM to defraud and mislead several courts, to thwart and obstruct justice and to enjoy the ill-gotten gains of likely perjury."
Excuse me, does that really sound like the "customer satisfaction guys" to you?
One of P.T. Barnum's biggest cons was a big sign with an arrow that boldly proclaimed"This Way to the Egress." Of course the "rubes" at the sideshow didn't realize that the word egress meant "exit" and they left the tent before they even realized it. Well, folks, the manufacturers have put up a big sign proclaiming"This Way To The Egress." Let's see how many "rubes" fall for it.
More Food For Thought
As I put this article to bed, I am sitting in a hotel room in Los Angeles. It is after midnight and I have been crafting these words for several hours. An empty snifter of cognac is sitting next to the keyboard. One thing that is really bothering me is that I had originally written another article for this issue entitled "Peace in Our Time".
The article was a blistering rebuke in true Ziegler style of the NADA concerning a joint letter they had issued with General Motors with language indicating that a compromise had been reached on the factory ownership issue. When I ran the article by a couple of close dealer friends who I often confer with before I submit an article to the editor, I received a flurry of calls asking me to reconsider the article. Publisher & Editor. Mike Roscoe and I were dissuaded from running that article after emphatic persuasion that it might lead to dissension in the ranks.
The article was about how Neville Chamberlain, Prime Minister of Great Britain, landed at London's RAF Airfield in London after meeting with Adolph Hitler in 1938, and stepped off the plane waving the agreement while proclaiming "Peace in Our Time."
I want to see the NADA stand up and go to war on this issue of factory ownership.
I have been assured that they are not "laying down" and that the joint statement was "miswritten." OkayI will believe that.
I also believe the NADA, along with the state organizations, is the dealers' best hope. This is not the time for some warm and fuzzy liaison with General Motors, Ford or any of the manufacturers, foreign or domestic. I will reserve my comments and personal feelingsfor now. This magazine is, after all, the dealer advocate publication.
I still wonder, however, if they have the stomach for controversy. I have not been allowed to speak at or conduct a seminar at an NADA convention since 1993 even though I was always among the top-rated speakers by the dealers at the conventions and the 20-groups. But as I write, Mike Roscoe is trying to put together a program where I will speak in Orlando on Friday, January 21st. The day before the convention starts. Stay tuned