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Afterlife
It was sometime back in the summertime of 1955. My good friend, Don
Dollar, invited me to go with him to the YMCA pool for the day and my
mother reluctantly agreed I could go. I was only eight and, although I
frequently lied about it, I really didn’t know how to swim. Don and I were
in the Cub Scouts together and I was ashamed to admit to him I couldn’t
swim.
When Don’s mom came to pick me up, my mother made me promise to wear the
bright orange life jacket I always wore whenever our family went to the
pool and, of course, I agreed. In truth though, I was always embarrassed
whenever the other kids saw me wearing it.
There were at least a hundred kids there...all of them were running wild
in an hysterical frenzy...and not one of them was wearing a life jacket.
Some of them were younger than I was. The YMCA pool was actually part of
the Good Shepard Church in Jacksonville, Florida. You guessed it... the
life jacket stayed in the locker room, never made it to poolside.
Jumping into the pool...the deep end...I was only four or five feet from
the edge of the pool. No problem, I kicked and splashed and grabbed the
side of the pool. Wow, look at me, I was swimming! Sort of swimming anyway
...By this time Don and some other kids were playing and no longer paying
attention to me since I didn’t seem to want to go too far from the edge.
I jumped again...this time farther out into the center of the pool and I
started splashing and kicking...what I thought was swimming...toward the
edge. Only this time some of the other kids jumped into the pool between
the edge and me. I couldn’t reach the side of the pool…too many kids in
the way. Water was splashing into my mouth now as I struggled to stay up.
I am a fifty-five year-old man; even though this happened more than
forty-seven years ago when I was a child, the memory is as crystal clear
as if it were yesterday. My pulse is racing and I am breathing heavily
just thinking about it. I swallowed a lot of water and I was
choking...panicking. I saw Don and a few of my friends playing just a few
feet away. I tried to call out to them but my mouth filled with water as I
went down. Even as I write these words there is emotion and flashes of
panic attached to the memory. I died that day...and I remember every
moment of the struggle until it became dark. I remember the very second
that I lost consciousness.
Speaking of dying...We are pounding the final nails into the coffin of
those goofy e-commerce initiatives the manufacturers tried to force on the
dealers.
Remember when Chris Denove and all of those other sage irrefutable
prognosticators at J.D. Power and Associates were predicting all of those
“New Age” future trends that ultimately inspired manufacturers to invest
billions of dollars into e-commerce initiatives. We were told that
franchised dealers were obsolete...dinosaurs being sucked down into the
tar pits. I still have those quotes in print. I especially liked Denove’s
Darwin quote about car dealers future.
Now, after flushing billions of dollars down the toilet, the manufacturers
are backing off...finally.
In July of 2000...in this magazine I wrote...
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 this it’s all based on the facts. 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, AutoByTel etc., have only served 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,
they forced themselves into the equation, carved themselves out a giant
slice of our pie, and whored up the entire market in the process
I was the lone “Voice Crying Out in the Wilderness”. In numerous articles
dating back past 1997, I have always said the Internet in relation to car
sales was a major “non-event”. I have always said, from the very
beginning, it was never going to happen...never...as in not ever...never
in a million years. Even when J.D. Powers and Auto Snooze were endorsing
and touting technology sales as the “Wave of the Future” I was on record
saying it ain’t never gonna fly. Remember it wasn’t all that long ago when
all of the so-called industry experts, media hacks and analysts were
predicting dealers would soon be out of business, replaced by online
vehicle ordering services.
General Motors and Ford made their dealers invest thousands...hundreds of
thousands in e-commerce departments. Our distinguished pals in the alleged
research community had our manufacturer partners believing websites would
inspire consumers to order direct from the factories as dealers faded into
oblivion.
General Motors’ e-GM was the beginning of a $100 million fiasco evolving
into a failed concept called AutoCentric that swallowed another $50
million. At the time I wrote an article in May 2001 titled “The Sale at
Moon Lake”. In that article I said in part…
Hey, did you see where General Motors has teamed up with AutoByTel to
launch a 90-day pilot test to sell retail cars on the Internet? … Last
month, GM announced the formation of a joint venture with their dealers
called AutoCentric. The stated purpose of AutoCentric is to sell General
Motor’s products as well as competing brands. Of course, you can count on
the folks at the factory…they plan to post the dealer’s invoice on the
website and to have dealers post a competitive “e-price” on the site. As a
logical, thinking human being with average common sense, it always
embarrasses me when we are forced to come behind and repair the
consequential damage to the industry caused by extreme fools in denial.
These people actually think they’re brilliant.
At the time, I actually received a phone call from the Vice President in
charge of e-GM. He was an extremely nice guy and intellectually involved…a
true believer. Of course history is history and I wrote in July 2001 in an
article titled…
A
Cornered Dog Will Always Go Straight For Your Pork Chop.
Estimates say that GM and Ford have both spent approximately $3.2 billion
on Internet Technology initiatives in the last two years. Of course
Consumers Reports (reputable research firm, no bogus slanted research and
also no glass trophies) says that less than 1.5% of Auto sales happened
online last year…YUP…Consumer Reports said only 3.9% of consumers shopping
for a car even tried it. Ziegler said repeatedly…over and over again… the
Internet is a bust for car sales. The average alleged Internet sale is
slightly over $1300.00 total gross, front and back less the commission to
the referral service.
Within ten months AutoCentric was history (as predicted by yours truly)
and earlier this year e-GM was quietly dissolved.
Of course Ford Motor Company under the less than ept management of
Monsieur Jacques Nasser jumped right off the edge into the abyss,
investing (blowing) more than $50 million in a company, Internet Capital
Group Inc. Our boy Jacques gave employees free computers and subsidized
Internet service programs. At less than a quarter a share today
...Internet Capital Group probably wasn’t a good investment.
WELL DUH!
According to a press release dated August 28th which reads in part…The
aggressive manufacturer-sponsored rebates and low-interest finance rates
that are spurring strong auto sales are proving to be an effective tool in
influencing the decision-making process of new-vehicle buyers, according
to the J.D. Power and Associates 2002 Escaped Shopper and Owner Loyalty
Study(SM) released today. "The study shows that shoppers weigh the
incentives of one model over another," said Chris Denove, partner at J.D.
Power and Associates.
I am grateful to Mr. Denove for sharing his insight and wisdom with the
rest of us.
Another headline that caught my eye… Saturn again takes the top spot in
J.D. Power survey. (Again) Has it ever occurred to anyone that if you were
to conduct a survey of Charles Manson’s followers that he would probably
have perfect CSI with them? In my opinion Saturn and their allegedly goofy
sales concept is a just niche market “Cult-Phenomenon” not a mainstream
barometer by any means. I view Saturn as cheap little factory-subsidized
cars with strong geek appeal but also driven by a smathering of normal
people. Excuse me but isn’t Saturn still losing nearly a billion dollars a
year?
What really burns me up here is the my perception of the way J.D. Power
apparently twists the results to arrive at transparently preconceived
conclusions that agree with Power philosophy. For example, the Associated
Press article I read quoted Mr. Steve Witten, senior director for project
operations at J. D. Power and Associates as saying “Once again, Saturn's
no-haggle policy eliminates the time spent negotiating a price, reducing
the number of dealership employees a customer must encounter before
completing the transaction,” Witten said.
“Because everyone pays the same price, the customer leaves without (the)
shadow of a doubt they got taken for a ride,” Witten said. (barf-f-f-f-fff)
Excuse me while I throw up all over the keyboard here. Listen to this guy!
Does anyone beside me get the impression the deck was stacked here by warm
and fuzzy people with a transparent agenda? This guy obviously consumes a
lot of Granola bars.
Right now I am wearing my official Saturn Propeller Beanie and humming
Happy Trails to You as I write these words. Now, you may remember I have
always enjoyed Saturn television commercials. Through the years Saturn has
produced and aired some of the geekiest…nerdiest…downright idiotic (my
opinions based on normalcy) television spots I have ever envisioned. I
especially remember the Fat Kid playing the tuba in the wheat field. Well,
hang on to your hats; they’ve outdone themselves this time. The latest
spots feature people backing out of driveways, standing in parking spaces,
driving down the highway and stopping at stop signs and red lights and so
on…get this…without cars. The first time I saw it I remarked to my wife
“Look at this goofy piece of crap”. I said that before I even realized it
was a Saturn spot. But you know what? I have to admit that Saturn spots
probably appeal to Saturn buyers. Now I am laughing until cognac is
spewing out my nostrils and tears are streaming down my face…Auto Snooze
says they are planning to spend $300 million on this allegedly geeky-goofy
(my opinion based my perception of normality) new Saturn ad image
campaign.
I have been highly critical of Ford’s lack of marketing plan and dogged
perceived determination to keep dicking around with their dealers with
their Blue Evil Certification but there is one policy I have to
wholeheartedly agree with. Bill Ford has a firm policy that all vehicle
lines must be profitable, standing on their own. Ford will no longer
tolerate niche products to flatter corporate image. Why can’t someone at
General Motors summon up the testicular fortitude (balls) to take that
stand with Saturn, which has dragged the corporation down for more than a
decade of staggering losses?
A quote from Bill Ford featured in the August 5th Auto Snooze…"There's no
plan B as some people have suggested," Ford said. "Really, it's a
fine-tuning of the plan we have in place. Cost-cutting is a very important
part of what we have to do to get our business model right."
I don’t know about you but that scares the hell outta me! Did he really
say there’s no Plan B? This is same mentality that led to not having
enough lifeboats on the Titanic. Their entire strategy revolves around
cost-cutting and decontenting their cars by $700 per unit. Bill was quoted
as saying…"We've added more engineers to help engineer costs out."
The truth is they have assigned more than 1000 engineers to the
cost-cutting/ decontenting project. They are gonna whack all of the good
stuff out of their cars until they show a profit.
Writing this over the Labor Day Weekend here at home in Atlanta. By the
time you read this in October we’ll already know the answer to the
question I am about to pose. What would happen to Ford if their plant in
Windsor, Ontario went on strike. The Windsor plant builds the Triton V-8
engine. We’re talking about Expeditions and Navigators here. If the Union
targets that plant for a strike, any stoppage would kill what’s left of
Ford’s market share. It would be devastating. I really hope that doesn’t
happen.
And the hits just keep on coming…one thing you can be certain about is
that Ford will never, ever, ever again be a participant in a tire tread
separation scandal. Right? We’re talking about another 600,000 tires,
installed mostly on Expedition and Lincoln Navigator. Ford has more
exposure because they mislabeled the tire pressure allegedly causing some
people to under inflate the tires. You couldn’t write a movie with a
script this bad. All I can say is “Stoopid”.
We’ve all heard the old joke in the car business that if the government
really wanted to win the war on drugs all they would have to do is put
General Motors in charge of distribution. And now we read about General
Motors Corporation recalling nearly 720,000 cars and trucks with defective
air bag problems.
Well, get this… Ford is banking on a real winner with the introduction of
the new Mach 1 Mustang high-performance specialty car. Mustang Brand
Management is telling dealers they will produce 5,500 units the first year
for U.S. Dealers. By the same token General Motors will build and deliver
18,000 new Pontiac GTO’s on sale in early 2004 and Ford can’t figure out
why their stock is hovering just above $11 a share while General Motors is
trading at $50.
Fiat denies report that it may hire Nasser
Now that’s a headline that caused me to sit up and pay attention. It seems
there have been reports in the Sydney Morning Herald (Australia) that
Jacques Nasser has reportedly been seen visiting Fiat’s world headquarters
in Turin Italy...several visits. Is it just my sense of humor or does that
strike anyone else the way it hit me. Fiat always enjoyed a reputation as
being a mechanic’s car. The anagram means “Fix It Again Tony”. Well, I am
laughing now because I figure if Nasser did take the reins at Fiat with
their allegedly poor quality cars…he would have a head start at putting
them deeper into the toilet.
Deiter Zetsche…what a cool name. I just gotta say I really like this guy
and his management style. I would like to see Dana Carvey do his Deiter
impersonation, I bet that would be a hoot. Assuming that Daimler-Chrysler
remains on course and that Chrysler is not spun off or sold, these guys
have got some incredible momentum. Zetsche’s leadership is world-class.
Zetsche was recently elected Chairman of the Board for the prestigious
Detroit Economic Club.
In an apparent slap at Ford and General Motors, Deiter as been quoted as
saying… “We see the product in the forefront. We do not want to decontent
our cars. We certainly want to content them right in the first place.” He
went on to say, “At Chrysler, our approach is to prioritize features early
on in the product development process, and keep them in the vehicle. We
call this practice recontenting, finding ways to add value early in the
process so as not to be forced to remove value later.”
Of course, during the interview, while Deiter was making those soundbite
announcements his company was in the process of recalling 495,000 PT
Cruisers.
Zetsche’s three-year marketing strategy is centered on passenger cars.
Currently more than 70% of Chrysler’s U.S. sales are minivans, trucks and
SUVs. Now Deiter says that more than two-thirds of Chrysler’s new
introductions in the next three years will be cars. Looking at the greatly
improved quality and styling of Chrysler’s products, I think these guys
are going to knock the ball out of the park. It stands to reason when you
consider that Mercedes strength has been in the passenger car arena…it’s
what they do best. If they can just focus on product and sales and stay
out of their dealers’ way, they are a major contender again. They need to
be very careful not to let the Five-Star program becomes another stupid
Blue Oval Certified fiasco. I hope to Hell the Germans take my opinionated
advice…don’t let J.D. Power and Associates interfere with your dealers or
their business.
Speaking of Blue Evil Certifiable…I told you this was going to happen.
Ford is ratcheting up the standards and now they are targeting your techs
certification. It isn’t going to end here either. They are not going to
continue to pay out this money…especially after they’ve gotten themselves
into this financial mess. A great many dealers started acting like crack
addicts when the first checks came in…you knew better but you got hooked
anyway. Now they are turning up the heat and you frogs are starting to
boil…just as I predicted. Every month I receive hundreds of letters and
emails from dealers who have come out of the ether and are screaming like
stuck pigs. If you don’t support legal action to stop what they’re doing,
they’re going to continue to take control of your entire operation and
swallow up what’s left of your profits.
Round one goes to the little guy in North Carolina. Freeman Ford Inc. of
Liberty, North Carolina won the first round in its legal challenge of
Ford’s Blue Oval Certification. The hearing officer rejected Ford’s motion
to dismiss and the hearing is scheduled to proceed on October 1st. The
issue is whether or not Ford’s program is two-tiered pricing (Of course it
is) and whether or not it’s legal under the franchise laws of that state.
Ford’s gonna get their butt handed to them again…and they deserve it. This
program in my less than humble opinion is one of the most despicable,
underhanded double crosses any manufacturer has ever inflicted on their
dealers.
Recently I have been watching the management initiatives coming out of
Volvo. Remember, Ford wholly owns Volvo. I suspect that Volvo’s version of
Blue Oval Certified is actually a testing ground to see just how far they
can go and what they can get away with…and what the dealers will put up
with. Well guess what? Volvo is now sending their dealers written surveys
about the “Diversity” of their employees and what positions they hold.
My jaw dropped to the ground when I found out about this. I have a copy of
the multi-page survey in my hand right now. Now, let’s get this out of the
way first…There nothing wrong with Diversity. I am a big believer in it as
witnessed by the multi-ethnic, multi-gender, multi-national composition of
my little staff of eight people in my little company. We are as radically
diverse as a company can be. So don’t make anything out of what I am about
to write.
My question is…by what right is the factory interfering in the staffing
diversity of their dealers? The questionnaire from Volvo headquarters I
have in my possession asks about the sex…ethic background…age…and
nationality of all dealership employees by department and position. This
is outrageous and questionably illegal. Unless I miss my guess this is
where Blue Oval certification may be heading?
In the meanwhile Toyota announces their net profit doubled in the second
quarter ($3.26 billion) as compared to the spectacular second quarter they
posted last year. All of this increase was due to conquest business in
overseas markets…like say, North America, which was up 21%. At home, in
Japan, their sales were off more than 8% even though they sell more than
42% of Japan’s car and truck sales.
Incredible! Wolfgang Reitzle is going to be paid a million dollars a year
for two years as a consultant to Ford. I think Wolfgang is a great car man
but this deal is unbelievable. It must have been a contract stipulation to
keep him off the market. Listen here. I can turn Ford around in less than
two years showing all-time record profits. Do you think I can get one of
those multi-million dollar consulting contracts while they still have the
money?
Think Again…who woulda thought that Ford would lose another $123 million
on electric vehicle technology including pulling the plug on THINK, the
wave of the future electric car company they purchased in 1999. Poor
customer demand and lack of government support were cited as the reason
for discontinuing the project. Ford’s $123 million investment produced
fewer than 1050 electric cars since it began. A Ford spokesperson was
quoted as saying… “Clearly that’s a disappointing number for us. We had
anticipated it would be substantially higher than that.”
We’re talking about a little two-seater plastic body car that has a range
of 53 miles between charging and requires six hours to recharge and they
cost a lot more than regular cars and the batteries need to be replaced
every couple of years. Damn, for the life of me I can’t figure out why the
little bastards didn’t sell any better than they did?
Of course General Motors blew through more than a million dollars on the
legendary EV-1 electric car with similar success.
Two years ago I wrote about magical vibrations I was feeling concerning
the renaissance of Cadillac Division. Okay, okay so I drive an Escalade
and I love my truck. (Look for my new Rap Album coming out on CD next
month) BUT, remember I was driving an Eddie Bauer expedition when I wrote
that. The energy level at Cadillac is contagious. Escalade has lowered the
Cadillac buyer average age by more than 12 years younger. All of this new
product is introducing a whole new demographic buyer and revitalizing the
brand. From Yuppies to Rappers, movie stars to ball players, the Cadillac
is fast becoming the quality icon it is supposed to represent. Sales of
the incredibly successful Escalade are up 85% year-to-date and now the CTS
has increased the plant's line speed by more than 30 percent to meet
demand. They are projecting 48,000 units this year on a new product while
Ford is closing plants and selling assets to raise cash. Like I always
said…It’s all about the product Stoopid!
Truthfully, I am Bob Lutz’s biggest cheerleader but all of this magic at
Cadillac was in motion before he arrived. What Bob is contributing however
is the high-performance series Cadillac models that will go heads up with
the Europeans.
The next thing I remember I was throwing up violently and a nurse was
giving me penicillin shot in the butt. Mom and Dad (Chief) were there and
the doctor was asking me stupid questions. (I later found out the
questions were to see if I had suffered brain damage)
The YMCA Lifeguard was watching a bunch of kids diving for coins in the
deep end of the pool and he noticed one of the children was moving. They
say I was probably underwater for nearly ten minutes and I had no pulse or
vitals when they pulled me out. The firemen actually brought me to
consciousness before the doctors got there. For years I had asthma and
respiratory problems because the pool water damaged my lungs. The memory
is vivid and alive even now. Swirling a vintage cognac in a darkened room,
a fifty-five year-old guy appreciates life.
More Food for Thought
Hey did you read where AutoNation is going to go “No-Haggle” nationwide?
If you’ll remember a few years back I predicted AutoNation and CarMax
would be out of business by now. Of course I missed on that prediction…so
far. They became regular car dealers at AutoNation, abandoned all of their
original goofy business plans and changed their names and took the
AutoNation logo off the buildings. In other words they survived by hiding
their identity and blending in. At least that’s my theory. Now they say
they are rolling out No Haggle in all of their dealerships nationwide.
They don’t have a true “No Haggle” dealership anywhere in the world. You
see they have a little trick they call “Wiggle” in the deal. They don’t
negotiate on the car you’re buying but I have heard rumors of dozens of
cases where they “Wiggled” on the trade allowance…sometimes several times
during the same deal. That is still negotiating. Well in truth I’ve sort
of buried the hatchet with these guys…they are just another part of the
landscape since they abandoned all of their goofy press releases attacking
other dealers.
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