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Facing
The Brute
His
first name was really 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. 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.
Thinking
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 Budweiser. Even so I was
trembling as I approached him with snifter of cognac
cradled in my left hand. Voice 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 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 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 effect 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 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. And, what’s absolutely criminal 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 the
meager profits they are generating.
In
their own defense, you’ll hear these Referral
Services whining that they are actually 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.
Figures
I am hearing is that the average Internet Customer
profit across the industry is somewhere around
$1300.00 per unit…gross.
The
biggest laugh of all in this giant cosmic joke is that
the consumer is getting screwed here. 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.
I
have also seen statistics that indicate to me that the
overwhelming majority of Internet Shoppers actually do
double-cross the dealer that gave them the figures and
then they use those figures when they physically walk
into another dealer’s showroom and negotiate the
deal. The true "Internet Buyers" are really
is rare breed…a niche 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
for just a few 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 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 conventions 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 weak and less controversial.
Truth
is the truth and that’s all there is to that. I have
been pounded from all sides for speaking it many
times. 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. This 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. Other writers for this magazine tipped me
off on this story and I have been on it from the very
beginning.
I
just finishing watching a forty minute video of an
undercover report by CBS channel 2 Las 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 filled with
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 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 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 also 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 Maroone 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 6000 deals for
criminal violations, fraud and deception…a finance
manger 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
was 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 possibly 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 they were 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.
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