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Back
to the Future
One
of the most intriguing movies of all time was the
original Back to the Future starring
Michael J. Fox. We’ve all seen dozens of movies with
hypothetical plots about what would happen if you
could go back in time armed with the knowledge of what
was about to happen in the future from a “then”
perspective. Most of us, at some time or another, have
played that game in our minds. You know… “What if
I could go back and warn John F. Kennedy about the
assassination plot?” or… “What if I could go
back and warn FDR that the Japanese were about to
attack Pearl Harbor?”
Of
course you could go crazy pondering all of the crazy
contingent realities about what might have happened if
you were able to change the past. The possibilities
are endless. How would the present be different if
this or that would have been different back then? I
think the Professor called it The Time-Space
Continuum.
Watching
events unfold in the retail automobile industry over
nearly three decades I am certain that no amount of
timely warning in the past would have averted the
disasters we are experiencing today. You see,
sometimes I feel like the Voice in the Wilderness,
crying out warnings that fall on deaf ears. All of the
voices of reason seem to be drowned out by the
deafening roar of a cacophony of fools. Their
arrogance amidst their ignorance is inexplicable,
flying in the face of elementary common sense.
I
am shaking my head in disbelief as I watch Ford,
General Motors and Daimler-Chrysler doggedly
continuing to chart courses destined for disaster.
Hardly
a day goes by when the Industry Press doesn’t
contain still another headline about quality problems
at Ford and General Motors. I heard a rumor (which
probably isn’t true) that Jac Nasser has asked the
production managers in the plant to equip every new
2002 Ford Explorer with a complimentary roll of duct
tape in the console to be used when the rear glass
falls out. You
talk about blatant incompetence?
With all of the problems Ford has experienced
with unending recalls, bad press, and quality issues,
who would have guessed in their wildest dreams that
our boy, Jacques and company would screw up the launch
of their best hope for the future. Following a year
that bought to light more 170 wrongful death lawsuits
leveled at Firestone Wilderness tires, most of all of
them as original equipment on Ford Explorers…now we
see the redesigned 2002 Explorer rolling out with
major quality flaws. That is inexcusable, absurd, and
incompetent. Talk about fools in denial…Ford prefers
NOT to call this action a recall; rather they are
describing it as a “customer satisfaction
initiative”. Yeah, I guess you might say customers
might conceivably be rather dissatisfied when the damn
rear glass falls out of their brand new $40,000 SUV.
Now
Rick Wagoner and Ron Zarella at General Motors are not
the kind of guys to just lie down and allow the
competition to hog the headlines. These men have their
own bad track records and reputations to uphold here.
So, in answer to Ford, they launch 30,000 defective
units with life-threatening safety defects in the
control arm brackets that could cause the customer to
lose control of the vehicle unexpectedly while
driving. We’re talking about new GMC Envoys, Chevy
Trailblazers and Oldsmobile Bravadas...dare I say
it…General Motors’ products of the future. Dealers
tell me that General Motors was so scared about this
one they told dealers to call the customers and tell
them to park the vehicles wherever they sat…don’t
let the customers drive them another inch...we’ll
come and get them and tow them to the dealership. Buy
them back if you have to dealers were told. Hopefully
someone gently shook Jack Smith and told him about
this before he drifted off again.
Fortunately
for consumers, this is General Motors we’re talking
about here. Only 6000 or so of the defective units
were actually sold to anybody, the other 24,000 are
being repaired on hold at the dealerships.
Of
course this comes on the heels of General Motors
mini-vans side door latches releasing and sliding open
while the vehicles were in motion. (Another pesky
minor defect) I heard another rumor (also probably
untrue) that our boy Ron had the warning on mini van
mirrors changed to read… Objects in the
rearview mirror may be your children rolling down the
highway behind you.
It
seemed to be cleverly hidden on the very last
page…way in the back of the issue… page 47 of Auto
Snooze…one column by six inches...the headline read Nasser’s
take: 12.1 million, plus options. You
got it. They gave our boy Jacques a two million dollar
raise plus options in spite of the fact that Ford
product quality is in the toilet and the last few
years have been a public relations nightmare. Not
withstanding the fact that the Japanese are making
major inroads on market share. In spite of the fact
that Ford has bled money out of every artery, losing
billions due to stupid marketing strategies and
cost-cutting payback…they giving this guy a pat on
the back. Weren’t Ford executives’ bonuses
supposed to be tied to quality and customer
satisfaction? Here we are at a crossroads, at a time
when Ford Dealers are angry and militant. Their
relationship with their manufacturer is, for the most
part, surly and distrustful, Ford dealer morale is
rated at the very bottom, and now we find out some
jokers gave this guy a pay raise. Quit it! (My
opinion) I
would have been handed a cigarette and a blindfold
instead a juicy $2 million bonus increase.
On
a brighter note, it appears that the board at General
Motors were not afflicted by the same evident “brain
cramp” that infected the board at Ford with
temporary dementia. After widely missing targets for
net profits, return on net assets, market share and
quality…the board at General motors evidently cut
Jack Smith’s bonus by nearly $6 million this year.
Wagoner took a cut of nearly $2.5 million over last
year and Ron Zarella took nearly a 50% cut in bonus
compensation (go figure). I wonder if firing any of
these people for epidemic incompetence was ever
discussed?
In
a related story…(uh-oh I almost sounded like a
reporter there for a moment. I prefer commentator and
futurist)…did you folks see where Cynthia Trudell at
Saturn suddenly blew out and boogied on March 29th
with short notice to pursue a more prestigious job
hawking Sea Ray Boats? At the time I thought that was
rather strange didn’t you? One minute she’s
talking long-range goals with new product launch only
weeks away and the next minute she’s gone. She was
outta-there with such short notice that they didn’t
have a successor lined up or an apparent immediate
plan.
Then,
all of a sudden, they put Annette Clayton in a similar
position to the one Trudell vacated with a little less
title, authority and clout, reporting directly to the
GM vice-president of vehicle manufacturing, Guy
Briggs. Annette Clayton, who from her photos is
evidently a genetic clone of her predecessor, comes to
Saturn under the thinly veiled threat of “Move it or
lose it!” Ladies and Gentlemen, I believe we are
about to see the long overdue dismantling of Saturn.
All
I have to say is it’s about time. I have repeatedly
had to bite my tongue as I endured the slings and
arrows and all of those stacks of wimpy, whiny, weepy
letters and hateful emails from all of those hardcore,
diehard Saturn fanatic crybabies. Every time I wrote
something truthful about this train wreck, the whiners
came out the woodwork trying to say it wasn’t so.
Well guess what sports fans, it’s finally
official…now…Even General Motors begrudgingly has
to admit in their non-admitting sort of way that
Saturn is perhaps (indeed) the “Biggest Sucking
Sound” responsible for pulling General Motors down.
You
see, according to the statistical analysis compliments
of Automotive News and Bloomberg News Service, there
are articles claiming Saturn is losing $3248.00 on
every unit it sells with annual losses approaching
$900 million…that’s nearly a billion dollars
annual loss just to try to keep this pig afloat. They
just pumped another $1.5 billion into Saturn after $4
billion plant development. Saturn is the documented Black
Hole, subsidized at great expense from
day one, dragging GM further down as monumental losses
continue to spiral out of control.
Of
course they are still hanging on to feeble
(opinion)…very feeble alleged research, and I use
the word “research” lightly, by the prestigious
J.D. Power and Associates that still ranks Saturn as
number one in customer satisfaction. I don’t mean to
in any way intentionally imply that J.D. Power alleged
research is bogus, tainted, corrupt, predetermined,
bought off or fixed… BUT…all I am saying is that
it just doesn’t make sense to me that Saturn is
number in light of their pukie wimpy numbers. Perhaps
J.D. Power is in error somewhere here. Last year
Saturn sold less than half of their target number at
somewhere around a 14% loss of sales from the previous
year.
Now
(drum roll) I am reading allegations that General
Motors has given Saturn division some sort of
do-or-die ultimatum to increase production by more
than 66% by 2003 while, at the same, axing 18% of
their workforce at Springhill according to Bloomberg
News who claims to have a videotape of Saturn’s
strategic plan.
According
to Bloomberg, General Motors has drawn some sort of
line in the sand and will cut off all additional
funding to Saturn if the VUE Sport Utility launch is
not absolutely stellar. They have already allegedly
informed the UAW that they will cancel plans to
redesign sedans and coupes next year in Springhill,
Tennessee if the VUE launch is unsuccessful. This
would cancel production of other product and, in my
opinion, effectively kill the division. That should
have happened a long time ago before they flushed
Oldsmobile down the toilet. Even Trudell allegedly
confirmed the ultimatum just before she exited stage
left. Saturn has already been informed they will be
incorporating parts and assemblies from other
divisions into their production…in other words they
have torn down the last distinguishing remnants of the
original (allegedly goofy) Saturn business strategy.
All that remains is to get rid of that (also allegedly
goofy) happy-clappy sales process. Oh…and no more
“Geeky” commercials.
I
have repeatedly criticized Saturn as the poster child
for manufacturer retail naivety and ineptitude BUT it
took major pay cuts for top executives of the
corporation before they put Saturn division on the
money… “Move it or lose it!”
Bloomberg
says that General Motors would have realized…now get
this…GM would have realized 33% higher profits last
year if Saturn Division had only been able to just
break even. Does that mean that General Motors’ lost
33% of their potential profits because they were
subsidizing this documented loser?
Of
course, I just got off the phone with a dealer who
owns some of the biggest Saturn Dealerships in the
country. He tells me that Ron Zarella personally
assured him that the Bloomberg story was totally off
base. Another Saturn dealer who is a close personal
friend told me that Zarella said the same thing. But,
on the other hand, sources inside of GM are intimating
the story is right on target. Of course my thought on
that is…let’s see here…who do we trust,
Bloomberg News or Ron Zarella?
As
predicted and expected, the battle is continuing to
heat up on Blue Ovary Certification and there are some
dealer defectors leaving the ranks of solidarity BUT,
regardless of what misinformation is being pumped out
there, NOT in any significant numbers.
Ford
Factory Executives and several Ford Dealer Council
members have told me repeatedly that all of the
opposition to this Blue Oval Certified scam will
evaporate once you, the dealers, get the first checks.
They want you to believe that all of the other Ford
Dealers are now big fans of Blue Oval certification. I
believe that’s a calculated lie.
Ford’s
Jim O’Connor has personally been touring the
country, putting on the whole glad-handing
dog-and-pony show, meeting, wining (whining) and
dining with dealers trying to sell the program, often
shoulder-to-shoulder with Dealer Council President,
Jerry Reynolds. Jerry has long been a personal friend
of mine as well as a client BUT we have severe
differences here. These issues put a strain on the
relationship. I know Jim O’Connor, believe me,
he’s a wonderful man. Jim O’ Connor is perhaps,
the last remaining competent retail car guy near the
top in the Ford organization. I offer him great
respect BUT make no mistake about it he’s still a
soldier under orders and he is definitely on the other
side.
There
is a deep-seated belief in Dearborn that the dealers
will become addicted to the initial cash payments,
like cocaine. I think that they think you’re going
to act like a bunch of crack whores once you get a
stinking check. You are sheep being led to the
slaughter by Judas Goats. I am telling you
this…believe it! Once they’ve got you, the
dealers, hooked on the money, and if they were ever to
get through all the lawsuits, believe me, the money
will dry up. There is already some serious bitching in
top management at Ford about how much they are paying
out. Don’t sell out your legacy and your future for
a temporary bribe.
Now
they are holding the hammer above your head and
threats start happening. Many dealers have received
letters and correspondences from Ford featuring overt
threats implying that if you can’t get your state
associations to back off of these lawsuits, we will
still take the 1% and nobody will get the 1.25%
rebate. (This is not true by the way) I predict this
thing will be defeated nationwide and that it will go
away in its entirety, as it should.
The
truth of the matter is, simply stated, they are losing
and I think they know it. The reason they are stepping
up the assault is because it is a last stand
ditch-effort for them. They just got their butt handed
to them in several states where they tried to force
e-pricing with the Forddirect.com website. The Arizona
franchise laws held up in court, every line, and the
manufacturers lost in Texas on similar issues.
California backed them off as well. They can’t stand
up to these court battles and the spotlight bad press.
Ford
Executives act hurt, shocked and surprised that
surveys keep rating them at very bottom with some of
the crappiest dealer relations and morale in the
industry. Well, if they would ever stop dicking around
with their dealers and get back to quality and design
issues it might go away. My advice to Ford…hey guys
(gals) Rewey’s retiring…lighten up!
All
of the valid research I have seen shows the
overwhelming majority of dealers are still militant
and angry. They can see through the Blue Oval
two-tiered pricing issues and believe that Ford
can’t be trusted not to ratchet up the
qualifications out-of-sight once the issues are
settled...regardless of what warm dark substances you
are being fed about caps and limits on the standards.
Trust me, this thing is going to be unattainable in
just a few short years. I predict most dealers who now
qualify will not be able to re-qualify for
certification in the near future.
Those of you who are naïve, greedy, or just
lying down or sucking up on this one, you just might
the pitiful addicts they are counting on But, make no
mistake, you are in the extreme minority. The money is
already showing up in play and being used by
individual dealers in their advertising…It will drag
profits (grosses) down and you will end up being
forced by competition to give all of it back to the
customers. If Ford wins this thing all dealers will
lose…big time. This program is a factory profit
center.
From
reliable research I have seen, most Blue Oval
Certified Dealers, even though they are already
certified and already starting to receive the checks
are still working actively to support their
associations’ pending lawsuits and defeat this back
door threat to your existence.
If
ever you start to believe that Ford has backed off of
their initiatives to own and operate dealerships, let
me ask you this…why haven’t they sold the Auto
Collections? How come they are still doggedly
operating these dealerships in the face of monumental
embarrassment after seeing all of their inept and
inane silly-ass marketing strategies putting these
dealerships in the dumper…after proving conclusively
that none of their retail stuff works in the real
world?
Well,
the April auto sales numbers are in and some of the
Asian and European carmakers had record months while
the Domestics (Ford and General Motors) and
Daimler-Chrysler (semi-domestic?) lost double-digit
percentages of market share…again. Gary Lapidus auto
analyst for Goldman Sachs was quoted in USA Today as
saying… “Automobile sales are deteriorating for
the Big-Three” (Big two-and-one-half?)… “And
cash balances at GM and Ford are falling just when
they may be needed most.”
Wow,
doesn’t that sound just like something I wrote in
this magazine six months ago?
Toyota
showed another record gain with 6.7% over last year.
Is it any wonder that Toyota is capturing the market?
With Honda and Toyota collectively selling more
than 16% market share and growing, you’d think the
board members at Ford and GM would be frothing at the
mouth, assembling with ropes and torches in a lynch
mob mentality. It is not inconceivable that Toyota and
Honda could be at or above 25% of the market in the
foreseeable future. They don’t even have to
aggressively take it away from GM and Ford either. The
incompetence and arrogance at the very top of those
companies coupled with quality problems will continue
to cause them to self-destruct.
The fact that Ford’s market share is down
14.5 % in April is a symptom of epidemic mismanagement
that should not rewarded with two million dollar pay
raises. General Motors was off a whopping 15.7% as
well…and that’s compared to their already crummy
performance numbers. Chrysler, well, what can you say
about Chrysler…Deiter Zetsche says the reason their
sales were off 17.5% is because there was a glitch in
their ordering systems…(Rolling on the floor
uncontrollably laughing now coffee spewing out of my
nose) These German guys they’re such comedians huh?
Crappy product, bad dealer and employee morale, and
inept clue-impaired management never occurred to
anybody at DCX, it was a glitch in the ordering
systems that caused 28% decline in passenger car
market share in April.
The
secret to Toyota’s success is simplistic. They have
said it publicly over and over again…they build
great cars and they don’t dick around and screw over
their dealers. Toyota bends over backwards to keep
their dealers happy and enthusiastic. I have rarely
met a Toyota dealer with any serious bitches about the
way their factory treats them. A good friend of mine,
Paul Mika, a Toyota Dealer in Newport Rhode Island,
loaned me a new Toyota Sequoia SUV to drive for four
days while I was performing a Sales Manager Seminar in
Boston. What an incredible truck. As you know, I drive
a 2002 Cadillac Escalade, which in my opinion is the
finest SUV ever built by anyone, anywhere. General
Motors has some great product coming out if they can
stay on top of quality issues… BUT this Toyota, at
$15,000.00 less than my Escalade, priced heads up
against the Tahoe, was a real contender. The
appointments, apparent quality, fit and finish, and
the quiet smooth ride were coupled with great power. I
slammed the rear hatch three or four times to see if
the back glass fell out…nope this isn’t one of
Jacques’ new, produced with cost-cut parts,
Explorers.
In
addition, Mitsubishi was up more than 9% in April
and…whoa…look at this…Hyundai was up 24% and Kia
was up 29%. The beat goes on…with Lexus showing a
19% increase and BMW was up 30%.
The
point is that the market is showing a dramatic shift
to imports. They are taking huge double-digit market
share increases away from the domestics in the current
trends. I blame poor quality, bad press
(Ford/Firestone), incompetent top management and bad
dealer morale at GM and Ford more than I believe the
imports have done anything dramatically different to
take the market away.
Of
course, you could have read all of that in this
magazine six months…even a year ago. Winding down
another article for another issue, I am swirling my
cognac in the sunlight and wondering what I might have
done to change the present if I had been able to go
back into the past. My first thought comes to knowing
the Georgia Lottery numbers for last night’s Big
Game.
More
Food For Thought
It’s
a war out there. Right now sales are erratic and
unpredictable. You can’t accurately predict what’s
going to happen next. Dealers are experiencing great
months and bad months back-to-back with no apparent
pattern. It’s hard to put a handle on the market.
I
am telling the dealers I work with and the managers in
my seminars to aggressively advertise in high-profile
media. Most of the sales mangers in our dealerships
today are young and relatively green. There has never
been a time in their careers like this. They have no
point of reference to selling cars in a down market or
a roller-coaster market. Let’s face it, for the last
ten years or so, it’s been a “Duck Shoot”. Now,
we’ll find out who really has any talent and who was
just along for the ride.
If
you are going to stay at any reasonable levels, you
are going to have to take the business away from
somebody. These are the times that will show you who
the great dealers really are. You need to examine
every facet of your organization…especially your
accountability and sales processes. My strongest
advice to dealers and managers is to get rid of bad
people. Do it now! If you have anyone on your sales
force who is doing an habitual poor job, someone who
will never be able to rise to the challenges, someone
who is bogus or criminal or dishonest, someone who is
unmotivated and lazy…do me a favor! Lay this
magazine down and go out in the parts department and
get a big cardboard Valvoline Box. Walk up to that
non-performing sales person or manager and hand them
the box. Tell them to pack it and get out of your
dealership…and give them a bad reference. My best
advice to every dealer I work with is… “Get rid of
bad people!” Go fire somebody! I promise it will
make you feel better.
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