'Facing The Brute'
By Jim Ziegler
His first name was actually Gerald but everybody at Nathan Bedford Forrest Senior High School called him "The Brute." It was one of those quirky nicknames given to him by the other guys on the football team. "The Brute" was a giant, standing over six and a half feet tall. I had heard a rumor once that was told to me by reliable witnesses that they had actually seen "The Brute" bench press a small Buick.
Now me, on the other hand, back in 1965 I was weighing in at somewhere around 154 pounds. Now that's fully dressed and only if I was wearing heavy shoes. It wasn't always easy growing up on the Westside of Jacksonville, Florida. Through the years I've forgotten exactly how it was that I got sideways with The Brute, but I can clearly remember running full speed and jumping on the school bus after class, hiding out and hunkering down in the locker room and looking around every corner before I turned it. Life is really scary when you're only seventeen years old and "The Brute" is looking for you.
I thought about getting a tattoo that says, "I survived The Brute." As a matter of fact, I attribute "The Brute" with helping to develop my character. He has always been a major influence in my life. I learned to face my fears. It was because of "The Brute" that I got into training and lifting heavy weights. Although the dreaded showdown with "The Brute" never actually happened, it was because of "The Brute" that I learned to fight.
I remember practicing for hours, punching and kicking the heavy bag almost every day-skills that bailed me out several times later in life in assorted Westside bars.
Fast-forward this story to 1995, returning home to Jacksonville for my 30th anniversary class reunion. It was wonderful seeing all of them again and hearing how their lives turned out. The reunion was elaborate-well planned-a three-day event at a Jacksonville Beach hotel. I kept looking for him but he didn't show up until Saturday afternoon. He was a little grayer and a lot older. It occurred to me that the heaviest thing he's probably lifted in the last few years might have been a quart of Budweiser. Even so, I was trembling as I approached him with snifter of cognac cradled in my left hand. Voice almost quivering, I said, "How's life treating you, Gerald?" He stared at me for several moments with that trademark "Brute" look on his face, obviously trying to figure out who I was. Looking down at my name badge, he smiled a wide grin and stuck out his big paw. I shook his hand-I think we even hugged. After all these years, the man who so unintentionally heavily influenced my life didn't even remember any of it. I am proud to tell you about my friend, Gerald-"The Brute."
Well, I suppose the moral of that story is that you can't spend your whole life hiding out from "The Brute." Sooner or later you've just gotta face him.
In the retail automobile industry there are some major ongoing battles and those of you dealers who have been keeping a low profile are going to have to stand up and be counted. You people need to come out of hiding and face "The Brute." If you don't get militant, you're going to lose everything.
One of the biggest battles on the horizon involves the "Dot-Communists" and the factories. Truthfully, I am standing fully behind the manufacturers' position on this one. As I have repeatedly predicted in this column, these issues are headed for court in the very near future. When the dust clears and the battle is finally over, the outcome is going to dramatically affect the value of your franchise. In truth, everything you've ever invested or worked for could be next to worthless if these Internet services are allowed to sell cars directly to consumers.
So far, the Internet has not created the sale of one additional unit, it has only reshuffled the deck and reduced profits. This article is only my personal opinions and the spin that I have put on these recent events, but remember thisit's all based on the facts. And before you go getting all worked up over Internet car sales, let me point out that we're only talking about approximately 3% of the total cars retailed in this country. One thing you can really believe is that everyone who is in the Internet Car Sales Game is distributing more bogus statistics and bogus sales figures than you'd find in those little circle diagrams at the average multi-level marketing convention. To read some of the Automotive "Weakly" publications or to listen to the manufacturers, you'd begin to believe that the entire buying public is purchasing their cars on the Internet. It just ain't true folks-take a deep breath, look around.
The referral services, such as AutoByTel, have served only to de-profitize new car sales. All of a sudden, another layer of vendor has been forcibly inserted between the dealer and the retail customer. In my opinion, these so-called "referral services" showed up at the dance, totally uninvited, forced themselves into the equation, carved themselves out a giant slice of our pie, and whored up the entire market in the process. And what's absolutely unbelievable here is that the only profits they've ever made is the money that they took from their stockholders. Is that bogus or what?
According to some recent surveys I have seen, many dealers are firing the referral services in droves because they are sucking all of the profits out of the deal. In other words, the Internet referral services are taking more profit out of the sales than the dealers (although they themselves are not profitable). We've turned our retail customers into fleet buyers and these third party leeches are skimming off of the meager profits they are generating.
In their own defense, you'll hear these referral services whining that they actually are delivering to the dealers more profit per unit sold than the average retail deal in those dealerships. That is absolutely pitiful. I can only guess that they are comparing their average grosses with some extremely weak-ass dealers.
According to figures I am hearing is that the average Internet customer profit across the industry is somewhere around $1300 per unit-gross.
The biggest laugh of all in this giant cosmic joke is that the consumer is getting screwed. It doesn't take a genius to realize that you could buy the car cheaper just by going into the dealership and buying the car without paying the middleman (the referral service).
I have also seen statistics that indicate to me that the overwhelming majority of Internet shoppers actually do double-cross the dealer who gave them the figures. They use those figures when they physically walk into another dealer's showroom and negotiate the deal. The true "Internet buyers" are really a rare breed-a tiny niche in the market.
That's why so many dealers are frustrated with the whole thing. The Internet car sales inquiry is just a sophisticated "phone up."
Now there are some dealers doing a great job with Internet sales-my friends Peter Brandow in Pennsylvania, Charlie Schuss in California and Doug Waikem in Ohio are just two examples.
AutoNation claims to be retailing somewhere in the neighborhood of six zillion units monthly via their super Internet expertise. Based on their previous track record with their revolutionary Used Car Superstores, I am more than a tad skeptical when I read or hear AutoNation claims and press releases. I am still predicting that AutoNation will be sold off, piece-by-piece, dissolve and go "poof" over the next two years.
While I am looking at all of the players who are entering the Internet arena-What in the hell was Roger Penske thinking when he bought part ownership in CarsDirect through United Auto Group? You know Michael Dell is a player in CarsDirect as well. I think a lot of those two as businessmen. It's a shame but I think they're about to get their butts handed to them on this adventure.
I was quoted in USA Today last year as saying that Penske was going to pull United Auto Group out of the toilet (or words somewhat to that effect). I am embarrassed that I made that statement and-based on his performance with United Auto Group (which by my standards is still in the toilet)-I am embarrassed for Penske. This compares to his high-flying adventures a few years back when he bought Potamkin Cadillac in New York (* see Hindenburg disaster).
Retailing cars via the Internet is one very important facet of your total retail model, not the end-all, be-all that the factories and the propeller heads are trying to make us believe. I am having a lot of success in the dealerships that I work with in blending Internet and telephone contact in a Business Development Center environment, which is a high-tech sales concept. I am not anti-Internet. I am just anti-bullcrap. As a matter of fact, I have a great deal of Internet marketing expertise. I am just being realistic.
Enter The Brute
Let's talk about AutoByTel (I really don't like these people). AutoByTel starts talking about a "Dealerless" transaction-and then, Greenlight.com makes no bones about their intentions to sell direct-and then there's CarsDirect and CarOrder-each one of these vendors has a slightly different selling model but, when the dust clears, I believe that you'll see that all of them are eyeballing the direct to consumer sales model. There are potentially dozens of other wannabes who are going to spring up in competition with franchised dealers if the manufacturers lose this battle.
Let me say it again-the retail consumer is about to get screwed here. The "Dot-Communists" are positioning this as an "E-Commerce" issue but, actually, it is a lot more complicated than that. If your state franchise laws are weak on these issues-or if the U.S. government allows these storefront-sham Internet dealers to operate with no investment in the servicing and no responsibility to the customer after the sale, it will become a consumer nightmare once they have effectively put the legitimate franchised dealers out of business.
Personally, I don't believe the dealers are going to get substantial support from the NADA on these battlefronts. To tell the truth, I am disappointed with many of the things I've seen recently. I would never use this forum to attack the organization that allegedly represents the dealers but I am casting a skeptical raised eyebrow at some things that I am seeing here. I am sure that the NADA will know whose side they are on when it is time to choose between their dealers' best interests and "Convention Booth Sales."
Even though I have established myself as a nationally recognized expert in the retail automobile industry, it is no surprise to me that, although I was consistently rated as one of the top speakers at their conventions, and even though I am sales and marketing consultant for some of the premier dealerships and dealer groups in the country, I have been repeatedly and systematically rejected and not allowed to present workshops or to speak at the NADA convention since 1993. I have applied many times. Of course I have been the top-rated keynote speaker at dozens of state dealer conventions, annual meetings and local dealer conventions and literally hundreds of automobile industry events. Then on the other hand, I am trying to see it from their point of view. It might be more politically prudent to put a talking head up on the stage whose content is less controversial.
But the truth is the truth. I have been pounded from all sides many times for speaking it. I like to think I have character and I know I have honor. Sometimes you have to pay the personal price for standing up for what's right-maybe I'll never be allowed to speak again at an NADA convention. But these issues are important and you, the dealers, are my friends. Sometimes you just gotta face your problems in life head-on. That is a lesson I learned long ago for which I owe a lifelong debt to "The Brute."
More Food For Thought
By the time you read this-I am sure it will be old news. Remember I am writing these words on June 16th.
This week I became aware of the size and scope of the DMV investigation of Gunderson Chevrolet in Southern California. Another editorial contributor for this magazine tipped me off on this story.
I just finished watching a 40-minute video of an undercover report by CBS channel 2 Los Angeles which shows a surprise raid on the dealership by an army of DMV officers, loading trucks with what appears to be dozens of four-drawer filing cabinets containing "evidence." The report showed an army of customers demanding their money back and the GM of the dealership promising to repay incredible amounts of money to defrauded consumers who were allegedly swindled.
The alleged criminal violations and abuse of customers by this dealership is the kind of thing that turns my stomach. I teach sales and finance seminars and this is something that infuriates me. You don't have to be a criminal to be successful in the automobile business. Everything we do can be done in an honest and ethical manner. I also believe you have to be weak and/or inept to hire criminals.
If it weren't so tragic, it would be hilarious. Gunderson Chevrolet is the number one Chevrolet dealer in California-and it is an AutoNation dealership-one of their largest. By the time you read this I am sure that the case will have been turned over to the State Attorney General for criminal prosecution. We're talking about AutoNation here. These are the same self-righteous zealots who portrayed traditional car dealers as seedy criminals with their "Men in Plaid" commercials in Denver. Wayne Huizenga and Mike Jackson come off looking like Boy Scouts-all of their press about a new consumer-oriented way to buy cars from these great people. Now here we are with the California DMV examining more than 6,000 deals for criminal violations, fraud and deception-a finance manager caught on tape in what appears to be repeated criminal violations, outright lies and theft by deception.
I have long felt that the AutoNation corporate culture is weak, loose and incredibly inept-encouraging loose cannons (this is my personal opinion). But this is the worst and most despicable example of a criminal culture in a dealership that I have seen or suspected in 25 years as a professional in this industry. I also find it incredible that the general manager and the other managers could even claim they were not aware. That is the equivalent of saying that you are grossly incompetent instead of being a criminal. Any competent management or corporation would never have had this scandal.
Wayne Huizenga said AutoNation was going to clean up the car business. He needs to start with his own stores. He might even examine some of the newspaper advertising that Atlanta AutoNation stores are doing.
Jim Ziegler is President of Ziegler Supersystems, Inc. jziegler@dealeronline.com
