To Serve Man
By Jim Ziegler
March 2nd, 1962-perhaps the most fantastic Twilight Zone episode of them all-"To Serve Man."
The Kanamits arrived on earth from a distant planet- a planet far more developed than Earth. Standing more than nine feet tall they spoke telepathically. They convinced everyone on Earth that they were here to assist mankind in anyway possible with the use of their highly advanced, superior knowledge and technology. Before long they had convinced earth to disband our armies and they built domes around our cities for our own protection (and to keep us in) and, before long they had given the world unlimited energy and food supply. Eventually they even began to take humans on vacations, back to the Kanamit's home planet.
The "Head Kanamit" (Richard Kiel) gives the United Nations a book titled "To Serve Man" as a token of their good intentions. Still suspicious, the U.S. Government hired Michael Chambers, to decode the book.
Although skeptical, even Chambers himself was sucked in by the Kanamits' promises and eventually, he too found himself boarding one of their flying saucers to visit their home planet. Just as he was walking into the spaceship his assistant came running up to the gate screaming for him not to go. Chambers discovered that he had misinterpreted the meaning of this title. As his assistant screams at him that "To Serve Man" is a cookbook, Chambers tries to escape but a Kanamit pushes him down and the stairs close up. The ship then takes off, and the last thing we see is a Kanamit trying to convince him to eat- "We don't want you losing weight."
The episode ends with these words by Rod Serling-
"The recollections of one Michael Chambers, with appropriate flashbacks and soliloquy. Or more simply stated, the evolution of man, the cycle of going from dust to dessert, the metamorphosis from being the ruler of a planet to an ingredient in someone's soup. It's tonight's bill of fare on the Twilight Zone."
Well folks-last month Ford Motor Company rolled out the whole "Dog and Pony Show" as they went into a full-court press-a public relations extravaganza to sell Ford Dealers and the media on The Ford Blue Oval Certification Program.
On the surface you would have to believe that this is going to be a wonderful thing. I believe that Blue Oval Certified is a cookbook and Ford Dealers are scheduled to be the main course.
In truth, after careful examination, I have to believe that what we are seeing here is just Ford trying to make another end run around the covenants and commitments they have made to their dealers.
Reading recent interviews and comments by Martin Inglis, vice president of Ford brand operations in North America, once again I am hearing another Ford Executive referring to J.D. Power and Associates as "third party verification and third-party accreditation". My question is- "Who in the world who believes that J.D. Power is an impartial third party?" If this were a prizefight, personally I would have to believe that, "The Fix Is On."
Maybe it's just me but is anyone else out there getting the impression that the small dealer is about to get screwed? You little guys haven't got a chance. In my heart, I believe you are about to be assassinated by the poison pen of an allegedly impartial third party. One thing that Inglis is quoted to have said in one of the articles I read was, "All of the major dealers I have spoken to have been very positive about it." Excuse me just a second here Mr. Factory Vice President- What about the "minor" dealers Martin? Is that statement an admission that this is a program just for selected big guys?
Ford and J.D. Power and Associates are going to be grading dealers (and disqualifying the losers) on your facility, right down to the restrooms and the cracks in your parking lot. So you are probably going to be required to make a major investment if you choose to play the game. The big guys have a stacked deck.
Inglis would have us to believe that Ford dealers are enthusiastically embracing "The Blue Oval Certification Ambush," but in truth what is the alternative? They are calling it a voluntary program while at the same time they are reaching into the dealers' pocket and extracting an additional 1 % of the dealers' profits.
They are calling it a "voluntary program?" I don't recall talking to anyone who says that they bought tickets to this bogus lottery. Unless I miss my guess, the Ford Dealer Council was informed, not consulted.
Of course the select, elite, handpicked Blue Oval Certified Dealers will receive an additional 1.25% rebate back from the original invoice amount they paid.
Put a pencil to it! A friend of mine who is a CPA for some of the most successful dealers in the country told me that he feels that Ford is going to make a killing here-Blue Oval Certified is going to be a cash cow for the factory. Even if the program was really legitimate and even if they actually played fair (fat chance) they would be taking away a ton more than they will ever give back.
Excuse me, I don't care how they package it-it still boils down to two-tiered pricing and I believe that is illegal in almost every state. They are going to channel your customers to the factory-preferred dealerships- (I am closing my eyes and putting on turban now)-I predict that Ford Executives are about to become acquainted with an army of attorneys as dealers begin to sue their allegedly deceitful butts into the middle of the next century. I sincerely hope that Ford Dealers don't lay down for this. Can't these people ever just back off and stop screwing with their dealers?
The factory hook is customer satisfaction. It's a powerful buzzword when used as a club to bludgeon dealers into submission. Remember this, we're talking about the same manufacturer that has recently dramatically reduced the amount of time they allow technicians to do repairs under warranty. They did this to cut their costs-a move that many technicians feel is dangerous and unsafe-and certainly not in the customers' best interest when techs have to rush their work and don't feel they have time to properly road test their work. This is the same manufacturer that boasts that they have squeezed their suppliers to the bone. Of course, I wonder how safe are the parts and assemblies provided by suppliers under this much pressure. I certainly question how they could be producing first quality parts when these suppliers are under this much cost reduction pressure.
Ford product recalls are at record levels. I am talking about major defects, not your common garden variety seals and gaskets replacements. We're talking engines here and safety components. I think these people have a lot of nerve penalizing their dealers for their quality problems.
Selling Blue Oval Certified-my spin on this is that Ford is saying to the dealers that they have a lot to gain, and initially I believe they will have some really enticing carrots like the new 401(k) plan for employees, the select advertising and, of course, the cash they get if they are selected to qualify.
I predict that, in the early stages of the program, it will appear that everyone can win. It will be easy to get certified.
In the beginning I think you'll see that becoming a Blue Oval Certified Dealer will be about as much of a challenge as clubbing baby seals. I think that they are betting on the idea that dealers will fall for this like a bunch of guppies in a feeding frenzy. Then, like the Kanamits, once you have disbanded your armies and weakened your defenses, they will start ratcheting up the program and it will become increasingly difficult to qualify. Before too long, I believe we will see that only the elite, handpicked dealers can qualify as the standards continue to get tougher once you buy in.
Unless I miss my guess, the first thing they will do is eliminate "Dealer Holdback" on invoice pricing. I believe that initially they will give the dealers generous incentives instead of the holdback in hopes the dealers will swallow the bait as they watch the cork go under. Of course those incentives will dwindle and disappear once they have succeeded and you will have lost your holdback forever.
One thing I think you will see all of the factories trying to introduce as part of their alleged customer satisfaction programs, Blue Oval Certification not withstanding, is that they intend to give internet leads only to certified dealers. To me this is code wording meaning that they will be shipping your customers out of your market area to their factory-preferred dealers.
I get that they will be running strong advertising campaigns branding Blue Oval Certified Dealers as the only place to do business. There will be a strong second-class stigma placed on non-qualifying dealerships.
Another thing that really bothers me about the Ford Program is that they have some currently vague wording in the program about your sales processes and your F&I processes and ongoing training and your employee satisfaction. Watch out! I predict you are going to see your factory partner "de-profitizing" their dealers with the same no-hassle, no-haggle garbage that put their factory stores in the toilet in Salt Lake, Tulsa, Oklahoma City and Rochester. They spent more than 100 million dollars in these markets proving conclusively to me that they don't know how to retail automobiles and that they don't understand what the public wants.
I am getting that they want to put consumer warning signs in your finance offices and they want J.D. Power to dictate how you do business, and I predict that, ultimately, you will be sucked into allowing J.D. Power to "train" your employees. That ought to be some really meaningful, profitable training!
There are some really serious questions I would have if I were a Ford Dealer. "Do you really want J.D. Power and Associates dictating your policies?" "Do you trust the factories and do you trust J.D. Power and Associates?"
I would love to believe that it's really about customer satisfaction. But I believe in my heart that it's about greed and secret hidden agendas.
This weeks' interview with Ron Zarella at GM said that Ron is also eyeballing some sort of dealer certification for General Motors Dealers. I am thinking that if Ford pulls this off, you will see every manufacturer coming out with new and inventive ways to reduce dealer profits by taking them in the name of customer satisfaction.
Of course, the rumors about Zarella's demise are starting to circulate again. I even read an article on one of the outlaw Web sites that said he'd probably be history at GM by the end of June. By the time this comes to press we'll already know, won't we (written on May 14th)? I think the speculation is based on the idea that he will be unprotected when Smale retires in June. Some industry wags seem to think that if it were not for Smale, he would have been nothing more than a distant foggy memory already.
How about all of those mass resignations at BMW? Wolfgang Reitzle defected and joined Ford a year ago and now it looks as if the entire management team has walked (or as some suspect, they were fired) in the face of staggering losses and the absolutely asinine mismanagement of the acquisition and subsequent sale of Rover. The three that left could have been stand-ins for Larry, Curly and Moe. I predict that (although they firmly deny it) you will see Ford Motor Company acquiring BMW in the foreseeable future. Volkswagen is still a contender but I think Ford will pick it up. Then we see some new and exciting cars like the Volvo Crown Victoria, the Jaguar Crown Victoria, the BMW 740 Crown Victoria, the Mazda Crown Victoria, and the all-new Ford Crown Victoria. Is there a Rolls Royce Crown Victoria in our future?
These cars will compete with the Saab Opel, the Fiat Opel, the Chevrolet Opel, the Oldsmobile, Pontiac, Cadillac and Saturn Opels, and the all-new Isuzu Opel. Is there a Lexus-Fiat-Opel in the cards as Toyota and GM get cozier in coming years?
Well folks, once again I find myself sitting at the computer at three in the morning, staring at the keyboard and a half-empty bottle of Remy-Martin Cognac. As I put these thoughts on paper I realize that I am tired and it's time to shut it down for the night. I leave tomorrow for a series of private seminars-and then there are several speeches and conventions coming up between now and next issue.
I was recently privileged to be the keynote speaker for the Virginia and the Massachusetts State Auto Dealers associations' annual conventions-and I am looking forward to Speaking to the Texas Dealers Convention in July. I have spoken to more than 20 state and regional dealers meetings in the last two years.
This battle to strengthen states' franchise laws is far from over. Don't believe for a moment that the factories have backed off of their agendas. They are now working through third party factory-fronted organizations and lobbyists.
More Food For Thought
The lines have been drawn and the factories are staging to do battle with the dot-communists. Letters went out this week from Ford and General Motors warning dealers not to do business with the "web-based brokers" or brokers of any kind for that matter.
I am going to have to speculate here for a moment-first of all as to exactly what constitutes a broker, and secondly who cares.
I assume they're targeting AutoByTel Direct or whatever that thing they do is called. And I am sure they are probably thinking about Greenlight.com and maybe CarsDirect.com and that entire sector. All I have to say is that it's about time.
Of course I don't believe for a moment that the factories have the guts to finish the fight here. I personally would like to see the factories put some teeth into these threats and take some action with these people.
A recent survey by my friends at Car Dealer Insider indicated that more than 39% of their respondents fired at least one Web-based Referral Vendor last year. That's up from something like 16% a year ago.
In my experience, the average dealer using these brokers or referral services is paying the services approximately 80% or more of the total gross they produce, which is already pitiful in my estimation. The Internet can be viable but these brokers are a waste.
Jim Ziegler is President of Ziegler Supersystems, Inc. jziegler@dealeronline.com
