Ziegler Supersystems, Inc. August 2003 Dealer Magazine Article |
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A Feather in the Breeze I don't know if we each have a destiny, or if we're all just floatin' around accidental-like on a breeze. But I, I think maybe it's both, maybe both happening at the same time. Forrest Gump An industry adrift…unpredictable and out of control…a feather in the wind. Even an idiot like Forrest Gump could figure it out and define it in deep-philosophical metaphor masked in innocent simplicity. Unfortunately, we have our own unique collection of perceived idiots, morons, and educated fools sprinkled throughout the retail automobile industry…many of them in elevated positions of authority and influence. Watching the inexplicable exploits of some of our esteemed automobile manufacturers as they continue to dick around with their loyal dealers defies logical explanation. It makes a sane person want to stand howling at the moon scratching your body at both ends. Now, I am not talking about any specific factory or individual…the suspects that qualify should be self-evident. I would never directly call any factory executive, or anyone for that matter, a moron, an imbecile or an idiot but then again if it walks like a duck and quacks like a duck…then maybe it just might be a duck. A man asked him if he was stupid…and Forrest answered…"Stupid is as stupid does.” In other words, when I think about factory executives and some of the asinine programs we are seeing inflicted on their dealers the wisdom of those words rings through my mind…”Stupid is as stupid does.” In commentary totally unrelated for the most part to the preceding paragraphs, I couldn’t help but notice that Monsieur (French, pronounced: mon-sewer) Pierre Gagnon appeared on the front page of the June 16th issue of Auto Snooze featured in an article titled “Mitsubishi’s youth strategy stumbles.” The Automotive news article by Mark Rechtin begins… “Facing a flood of unsold vehicles and a load of bad consumer debt, Mitsubishi Motors North America is taking drastic measures.” The article basically says Mitsubishi admits they blew it big time and they are backing off of all of the allegedly goofy stupid stuff they’ve been doing after getting their butts handed to them. Gagnon’s public admission seemingly validates everything I wrote more than three months ago in my commentary titled “Bombs Over Babylon”. Of course, in Mitsubishi’s case, I believe we are teetering on the brink of too little, too late. This puppy is already too deep, deep in the toilet fighting the whirlpool. At the time I joked that Mssr. Gagnon was apparently a “pretty boy with good hair”…well now, I have seen this recent photo and I stand by my story. Not a wrinkle in his suit, if you blurred your eyes it you’d swear it was a mannequin. I am in no way meaning to imply Gagnon is just another “Dilbert Executive “, far from it…however I personally suspect it must take a small fortune to keep this guy stocked in hair mousse. While Honda and Toyota and other manufacturers are jumping into the Generation Y Derby, it appears that Mitsubishi is getting out, returning to core competency and looking for older, more stable and reliable demographics. (Note: Mitsubishi-competency, potential oxymoron) Mark Rechtin is a professional friend and I consider him to be a good solid journalist whereas I am a shoot-from-the-hip commentator. The Automotive News article cites consumer loan defaults, deferred payments, and over-residualized balloon payments coupled with the fact that sales are off more than 23% for dragging the company down. Point by point everything in Automotive News article was previously written in my column. Son of Blue Oval Certification One of the most evil, sinister, diabolical plots in retail automobile history is Ford Motor Company’s Blue Oval Certification Program administered by J.D. Power and Associates. Of course that’s been my personal take on this fallopian-tube debacle since its inception. In article after article I have written about the twists, turns, and subplots as a manufacturer sought to control, dominate, micro-manage, punish and reward their dealer partners. As a result Ford’s Dealer-Factory relationships have ranked at the very bottom…as in the basement…in virtually every reputable survey on the subject and at least one disreputable one. From the beginning I saw Blue Oval Certification as the sword of Damocles hanging over the dealers heads. The plan was always about selectively eliminating dealers and propping up others. Well now, let me tell you, it isn’t going away, it is only transforming into something else…and I am predicting that its going to be more evil and more confrontational than the original. Right now there are plans on the drawing board for what I will call “Phase Two. AND…if my sources aren’t off base, J.D. Power and Associates are the architects. Remember I said this…my impression is that the next generation program will be more about punishment than rewards. Let’s review some history here as I build this story. Starting about three years ago I wrote a series of commentary building up to the present. Indulge me here as I revisit some of my previous articles and predictions. In October of 2001 I wrote an article titled Serving up Chicken Salad. At the time I said… One thing’s certain… you can expect every manufacturer, import and domestic, to develop their own versions of Blue Ovary Certification if Ford wins (With the cash incentives/penalties). I believe General Motors, Honda and Toyota already have their programs in place and ready to launch. This is about domination and control…and ultimately factory ownership. If Ford wins I believe everybody’s going to get screwed. Well, the future I was writing about then has arrived. Several manufacturers have, predictably, rolled out new programs designed to micro-manage, control, eliminate, and punish their dealers. Of course, they are implementing all of this under the convenient guise of customer satisfaction. In September of 2001 I wrote an article titled I Just Heard the Music. At that time I wrote… Now, I am hearing rumors and rumblings about Toyota and Honda hiring some allegedly goofy one-price and Internet consultants and preparing to start interfering with their dealers’ selling processes. If Toyota and Honda don’t watch it, they are about to suffer the same hard, arrogant fall we have seen these other giants suffer. Gearing up to incorporate mandatory Internet initiatives into their process is going to kill their momentum and demoralize their dealers. A message to Honda and Toyota…you’ve got great dealers, great products and great profits, don’t dick around with the formula. Of course, when I wrote that, Jim Press, CEO of Toyota North America, fired off a nasty email saying that was untrue and accusing me of trying to alienate his dealers. Then a year later the truth comes out that they did in fact hire a new age consulting firm “Fresh Machine”, exactly when I said they did, and they were indeed pursuing technology based sales and one-price in the form of Scion. (Which I have nicknamed the Toyota Hindenburg project) It is important to remember the factory denied it vehemently even though it was the absolute truth. Well, so much for the credibility of factory denial. Then in January 2002 I wrote an article titled Kiss Him Good Bye in which I made the most dramatic predictions of the series. At the time I wrote… As profits swell,
up 45% over last year, Honda Motor Company is about to blow it in North
America. I predict we are about to see American Honda becoming
aggressively involved in the retail process. Unless I miss my guess Honda
Dealers are about to become extremely agitated. (Pissed off maybe) First
of all this has been building up for nearly two years. Reportedly, Honda
is not entirely satisfied with their dealers’ customer satisfaction
ratings. Several dealers have been gracious enough to supply me with some
documents that aroused my curiosity. Is it true that American Honda has
entered into a business arrangement with AON Corporation to provide
mandatory retail training programs and processes for their dealerships?
According to informed rumor, the meeting when this was allegedly announced
to their field personnel took place…oh let’s pick a date...howsabout
November 19th. For those of you that aren’t aware, AON is a corporation
based in Chicago and the president/CEO is Pat Ryan. Yup, that’s the one
and the same Pat Ryan that sort of invented F&I thirty years ago. If the
rumors are true…he-eee-eee’s back! When that article was published I received literally hundreds of calls, emails and correspondences from Honda Dealers and Managers. The overwhelming sentiment at the time was that I was off base. Most people felt I had placed my head in a warm, dark, moist place. Honda Dealer Council members called me and we had lengthy conversations about it…I was repeatedly told that I was wrong and that Honda was putting together this great program and Excell was going to be a positive, dealer-friendly experience. Now remember, I have incredibly good sources…and my sources run deep inside of many organizations. I don’t pull things out of my anatomy on a whim and I rarely speculate. Notice that I not only knew about the Pat Ryan/AON deal…I knew the exact dates every step along the way…months before it was announced…AND, I also knew about the content of those meetings and some of the conversations that took place between certain executives. By December 2002 I was receiving a lot of heat from Honda Dealers who were totally in disbelief that I was writing negatives about their manufacturer’s Excell program, predicting sales declines and insinuating there was treachery in the shadows. My December 2002 article titled Invasion of the Body Snatchers addressed the issue again. At the time I wrote… I have received more than a few angry correspondences from Honda dealers over the last year because I have warned repeatedly that Honda was poised to take a hard fall. In spite of record profits, I believe Honda is at the top of the hill on the roller coaster looking at a steep and rapid decline. The first signs started when they began interfering with their dealers and sales processes. Well, last week Honda shares took their first nosedive losing 14% after underperforming analyst’s expectations for the first half and revising their annual profit forecast downward more than 3%. In light of Nissan’s spectacular over performance, several analysts downgraded Honda stock to under perform. Nissan stock was upgraded as the analysts downgraded Honda. One quote that jumped out at me was... "In view of new vehicle launches ... we see Honda's momentum heading south, while that for Nissan continues to rise, suggesting a growing gap in momentum," this was an excerpt from a letter to clients from CSFB analyst Koji Endo. Comically enough, Honda now claims that losing market share was actually part of their corporate strategy. Their spin-doctors are talking about Honda’s less-is-more plan. Of course in my opinion based on logical reality, Honda’s claim that they are deliberately giving up market share is one big stinky pile of bovine scatology. February 2003 I wrote… Honda is prepared to escalate their Excell Program to meet J.D. Power standards and I predict their market share will plunge into the deepest levels of the toilet. Honda has been one of the premier, best selling cars in the world, with a world-class quality reputation, and now they are preparing to start screwing with their dealers, chasing some bogus “Blue Oval Certification” type program. Are you people stupid or what? You’re prepared to screw with the dealers that put you where you are to do what? I suggest that those geniuses at Honda better take a look at what happened to Ford when they started screwing around with their dealers and chasing J. D. Power surveys. Hondas new thirty-five page dealer agreements are the death knell of the company. No wonder Nissan is poised to kick your ass. And then again in March I wrote the following… Many Honda dealers approached me at the convention asking why I was so down on Honda. Well, the truth be known, I think Honda is really screwing up in the direction they are taking…and the directions they are apparently planning to take. Honda has been known for great cars and great dealers, some of the best dealers on the planet in my opinion…BUT…remember I said this…they are poised to take a hard, hard fall as they begin to accelerate their intrusion into the retail sales process reminiscent of and in some ways similar to Ford Blue Oval Certified. In Ziegler terminology, I think these people are going to start to accelerate their perceived interference in the sales processes of their Dealers…dicking around with what has been a winning formula. Both Honda and Toyota have, in my less than humble opinion, gotten distracted…eye off of the ball…chasing allegedly goofy new age marketing processes and low end product as well as sucking up to and trying to win the approval of questionable research firms. In the meanwhile Nissan is bringing the game straight at them with this impressive product blitz …and…these players haven’t got the depth on the bench to stand up to it. I think Nissan and Hyundai are going to eat their lunch in a vicious dogfight on U.S. turf. Now that I have set the stage, Act II is already underway. About three months ago I started receiving progressively more and more calls and emails from Honda Dealers and Managers…again. Now however, the mood has changed. For the most part, the dealers and managers attitude toward the factory and the program is turning increasingly hostile and ugly. Of course, I have repeatedly predicted this was going to be the case when the impact of this goofy, over-bearing, poorly administered, allegedly bogus initiative began to hit home. (My personal opinion based on the fact that I have an IQ higher than an amoeba) So…last week (June 25th) I sent out a mass email soliciting Honda Dealers and Managers to tell me everything good and everything bad about the Honda Excell Program. I received more than a hundred emails, Faxes and phone calls. Some Dealers actually supported the program and embraced it wholeheartedly. I subdivided these Dealers into two groups, those who genuinely felt it was a great program in one group and those who needed to carry a stick of Chap Stick whenever they are in the presence of Honda Executives in the other group. However the Dealers who had even anything at all good to say were outnumbered by approximately twenty million to one (Power projection survey math) by dealers and managers who were frothing at the mouth, rabidly angry. As I predicted, this allegedly voluntary program (try not signing up and feel the pressure) is all about micro-management. Hastily thrown together and not well concepted…one of the dealers’ single biggest complaints seems to be AON Corporation staffing. Well, I can’t personally comment on the quality of the people AON is putting in the field or what their qualifications...or their lack of qualifications are. All I can say is I have spoken and corresponded with a number of people who are substantially less than enchanted or respectful of AON Corporation and their staffing. I wonder…I wonder if Honda had some kind of big meeting a couple of years ago and said… “Hey look! Our business in North America is really great. We’ve got great dealers and great product and great product satisfaction. Our business is really rocking…BUT…you know J.D. Power says our dealers’ CSI is not so good…our Dealers are selling a lot of cars to repeat Honda customers but the J.D. Power surveys say we are in trouble with CSI. What are we going to do with our Dealers? Hey, I know…let’s spend $38 million on a program designed to piss them all off.” In my little informal survey I asked the dealers and managers to email or Fax me 10 reasons why Excell is good or bad. I asked them to be specific. Here are some of the one-liners I received in their ten good or ten bad items. One Dealer said… “All Bad!” “Basically Excell is binder management. They expect you to do all the busy work, post the process mapping on the Internet, maintain your binders in-house and you’ll pass.” Another Dealer said… “Looks like, feels like, acts like, and smells like Ford Blue Oval. You think the guys from Honda would read the news.” “Our Excell Objectives are set based on our past performance, so the better you did in CSI previously the higher they set your Excell objectives.” “The biggest negative is the money burden on our dealership.” “The customer satisfaction angle is a way to manipulate and control the retail environment with a sugar-coated, heavy-handed method.” One large prominent, award-winning dealer, one of Honda’s premier dealers nationally, wrote the following…
”Huge
investment in time
Most dealers just faking it to make the factory happy!” “The Resource Management trainers (AON) don’t seem to understand the entire program themselves. Our trainer comes in and just wants us to print out what we have been doing and hasn’t offered us any guidance in what this thing is about. We had to find out at these regional meetings. He’s pushing us to keep him but our obligatory time is done and so are we. It is an intrusion on the sales process. It is cumbersome to administer and the rules seem vague and made up along the way. We don’t receive many negative responses-yet we must come up with action plans for something to change something anyhow.
Ziegler notes that now you must pay for your own president’s award. Another GSM says… “Any program that is top weighted is a negative, not a positive. A “5” is a perfect score, “4” counts as a zero. If this makes sense to anyone, please let me know! Customer states, “Dealer was great, give them a perfect score, I don’t have time to answer.” Survey doesn’t count – makes a lot of sense, but I’m not sure as to who. Only 4 out of 12 questions count for score. Must be the new math. It starts with a “scored” question instead of a “soft pitch” to warm up the customer. I’m sure this makes good sense also. No consideration is given when Honda can’t supply the product in a reasonable timeframe.” Another says… “The telephone interviewer doesn’t care whether she/ he is talking to the buyer of the car therefore many inaccurate responses are logged as real ones. Once a survey is completed it cannot be contested even if it is erroneous” Still another says… “ It takes nearly our entire Acura Staff (Service Manager, Service Tech, Parts person, Office Rep, Receptionist, Finance, Sales Manager, Sales Person, General Manager) and the requirements are clearly of limited use and the time and effort required is cumbersome and could be much better spent doing the work of our dealership.” A sales representative says… “Top box scoring is a sham...think your getting a bad survey, mess up the VIN on the paperwork. The people can't speak English at Excell (AON). Honda doesn't care who responds, we have surveys answered by people not even involved in the deal. This program has created hatred towards Honda by the people who sell them.” I could go on and on…these are just a small fragment of the correspondences I received from dealers, managers, and sales representatives. Let me say, in fairness, there were some positives as well and I chose not to print them in this article because they were very few and they were repeated generalizations about the goodwill and customer satisfaction the writers felt the program would generate. The point is the responses were overwhelmingly angry and/or irreverent toward Honda and especially toward AON. I spoke to several of the (former) Dealer Council members I spoke to way back when I first caught wind of the program. These men are still very actively involved in Honda’s national programs. Both of them admitted they were wrong on many/most of the issues they endorsed initially when we spoke two years ago. Their opinions on the program have changed. One of them said to me that he expects the program to escalate requirements and penalties including a facility requirement to validate. Several large and prominent dealers told me they were losing employees who refused to put up with what was happening as a result of this program. I am also told that some people mistakenly feel that certain “Bell Cow” dealers are being rewarded with additional points. I am certain that is a false perception. Honda learned that lesson a long time ago…didn’t they? From what I am told the program is not only bad in spirit and intent…the implementation is inconsistent, amateurish and sloppy. Some of the people you are sending into the dealerships have little to no grasp of the program …or how car dealerships operate. Some of us suspect perhaps AON may well have found some of those people who actually will work for food. Well, what did they expect? As I continue to predict this program will be the catalyst that puts Honda sales in the dumper. I want the Honda executives who are certain to read these opinions and commentary to stop and look at what happened to Ford Motor Company when they tried a similar tactic to steamroll their dealers. I predict this program and all of its sinister implications will cost you dearly as you continue to alienate a powerful, professional dealer body that once exhibited a loyalty to their manufacturer second to none in our industry. You are pissing that all of that away and you’ll end up paying dearly for it. Well guys and gals…Many of you asked me to write this article and now I am asking you if you have the guts to make a stand? I have never seen so many people who were willing to talk only if they were kept anonymous because of fear of repercussions. If Honda has you that intimidated, something is definitely wrong. You better not lie down and continue to take this. Please write this magazine or me a letter…and please sign it. If you request, your name will not be used, but we must have the signature. My email address is [email protected] please write to me and tell me what is happening with Excell and your dealership. Get your fellow dealers who may not have seen this article to write to me…Fax it around and email it to your friends…good or bad…positive or negative…write the letter. You are also welcome to go to www.dealer-magazine.com and start a discussion thread about these issues with your fellow dealers and myself. Lifting a snifter of vintage Remy Louis XIII cognac, swirling it in the half-light of my darkened office; it is time to put this one to bed. Maybe life really is like a box of chocolates. My favorite part of the movie was when Forrest said… “That day, for no particular reason, I decided to go for a little run. So I ran to the end of the road. And when I got there, I thought maybe I'd run to the end of town. And when I got there, I thought maybe I'd just run across Greenbow County. And I figured, since I run this far, maybe I'd just run across the great state of Alabama. And that's what I did. I ran clear across Alabama. For no particular reason I just kept on going. I ran clear to the ocean. And when I got there, I figured, since I'd gone this far, I might as well turn around, just keep on going. When I got to another ocean, I figured, since I'd gone this far, I might as well just turn back, keep right on going. When I got tired, I slept. When I got hungry, I ate. When I had to go... you know... I went.” And then Forrest says…"I'm tired now. I think I'm going home." More Food for Thought You’ll never believe this in a million-billion-trillion years. Guess what? You guessed it! Nissan has just announced they have hired J.D. Power and Associates to administer their new program called “The Edge” which is described as a process improvement initiative designed around identifying processes that lead to better sales profits and customer satisfaction. The letter to all Nissan dealers dated June 26th, from William J. Kirrane, VP-General Manager of Nissan Division; promises no certification or factory inference…no punishments, penalties or rewards…only a sharing of ideas. Kirrane’s letter reads in part… “With the aid of J.D. Power retail experts these stores will be provided with individual research, consultation, and assistance custom-built for their sales systems in their specific market.” I don’t know about you guys and gals, but personally, I started getting a sick feeling somewhere around the part where they introduced J.D. Power into the equation. After all I have said many positive things about Nissan and now here they are making what I think is a disastrous, monumental miscalculation…oh well, look at what J.D. Power influence and retail expertise has done for Ford’s market share. Okay folks get those letters, phone calls, Faxes and emails cranked up. I want to hear from you Nissan dealers. Whaddyathink is gonna happen here. Is there some Vaseline in your future? I wonder if any part of this program includes allowing J.D. Power access to your database? |
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