Jim Ziegler's Dealer Magazine Articles

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The Quarter in Twelve Flat

Over two hundred spectators lined both sides of the road that cold December night in 1968. Some people were sitting on their car hoods leaning back against their windshields while others stood around in small groups, shoulders shrugged with their hands in their coat pockets. You could see their breath rising above their heads in clouds of steam. There may have been some Budweiser present.

I was in the "Outlaw Lane" lining up against a 55’ Chevy with a "Rat 302" engine. This was my second run that night. I had just blown by a 1968’ SS Chevelle by more than two car-lengths in my previous run. A flashlight started the race and my tires smoked as the backend tried to come around, fishtailing wildly as I came spinning off the line...the posi-traction kicked in, the car straightened out and I was off the line...ahead by half a length.

Subtly reengineered by Stanley Mizell, the Jacksonville-based MoPar genius, my 1968 Dodge "Super Bee" was fast…real fast. The police were impressed. As soon as our tires turned on that second race, more than a dozen patrol cars with flashing lights and sirens came streaming out of hiding. The police were staking out the drag races, after me in particular, hiding in the City Dump with their lights out. That Dump Access Road was perfect for drag racing because it was a straight two-lane, almost a mile long, with no intersecting roads or cross traffic and it was isolated at 2:00 A.M.

Twenty-one years old, young and foolish, I thought that maybe...just maybe I had a chance to outrun them. Fourteen miles later, I was retired from drag racing forever. Going to the strip on Saturday nights, I used to love watching Stanley Mizell run his world record breaking 426 Hemi "Cuda".

Now I see where Daimler-Chrysler is re-introducing the "Hemi". The production version of the Chrysler 5.7 liter "Hemi-engine" concept car from all accounts is going to be a real "Smoker". That’s the magic and the imagination that has been missing in the car business. Chrysler has the most imaginative engineering team in the car business today. I believe that one of the main reasons that Chrysler is capturing major market share gains is because they are so far ahead and "out-of-the-box" with sheet metal design and performance innovation.

I have seen the new Thunderbird and I must admit that Ford has a real winner provided they can put a performance engine in it. The car is going to be sensational. Finally, Ford is making some styling progress, even if they did have to borrow heavily from the past. My opinion, the new Taurus and the new Sable are not nearly as "Butt-Ugly" as their predecessors BUT they are still more of the same, a giant yawn. The Taurus is once again redesigned to be nothing more than a program car.

On the other hand, General Motors will probably discontinue the Camaro, totaling abandoning that market segment...a stroke of incredible ineptitude in face of spectacular Mustang sales which proves that is a viable demographic.

In all fairness, General Motors is coming out with some spectacular product. In truth, I am considering buying one of the New Generation Cadillac Escalades myself. Remember, I have had seven new Town Cars, an Eddie Bauer Explorer and I am currently driving an Eddie Bauer Expedition...But now, for the first time, I am strongly considering buying a new GM product.

Saturn continues to excel at failure. Despite glowing J.D. Power research about customer loyalty and customer satisfaction, Saturn is recalling another quarter million cars for yet another round of safety and quality related reasons.

Saturn LS and Chevrolet Malibu just took major crash test hits earning only a two-star rating (out of five) in side impact collision tests. Excuse me a second here, are you dealers having as many problems with rebadged Opel products as I am hearing? I would appreciate some letters on Catera, Malibu, Saturn LS, and Cutlass quality. I drove a three year old Catera recently, supposedly a certified, reconditioned car...What a piece of.... Well never mind, I will just say it shook and rattled and sputtered. Maybe it was just that specific car but I am told that is not uncommon with GMs Opel clones.

It is just one week after the NADA Convention in Orlando and I can’t believe that I am sitting here writing this on Super Bowl Sunday. We are all iced-in here in Atlanta. It is two hours to kickoff and I have just broken the seal on a bottle of Remy-Martin vintage cognac.

There’s a lot happening and I am going to try to give you my takes on everything that I am hearing and seeing. Remember, as always, this is all just my opinions and perceptions of events, people and places in the industry.

First of all, did you hear that Roy Roberts is retiring from General Motors? Roy can choose to tell people that he’s retiring if that makes him feel good, but I have to say that "Cut and Run" is a better description of what we are seeing here. Do you seriously believe that he isn’t stepping down one step ahead of the proverbial axe?

Let me look into my crystal ball here for a moment…something’s coming to me…yes, it’s becoming clearer now…I don’t know exactly what it means but the voice is saying, "Zarella’s Next!"

The NADA is strutting and taking bows over the announcement from General Motors chairman, Jack Smith, that General Motors will no longer pursue owning and operating dealerships, and, that GM would no longer pursue lobbying state legislatures to overturn state franchise laws forbidding factory ownership of dealerships.

In similar statements, Jac Nasser and Jim O’Connor at Ford Motor Company finally said the words that Ford would NOT sell cars directly to the consumers over the Internet. Of course, I would feel better about the Ford showing "Good Faith" if they dropped their lawsuit against the Texas Department of Transportation.

Ford is now contending that they intend to use the Auto Collections as an experiment...a learning laboratory so-to-speak, according to Ford VP, Brian Kelley (who in no way resembles Opie Taylor of Mayberry). "Experiment?" Wasn’t that the same garbage they were spouting in the beginning of this fiasco before they blitzkrieged across the country buying up dealerships and taking legal action to defeat states’ franchise laws? Didn’t they just buyout

Dick Strauss in Virginia? These people haven’t let up for a moment.

Give me a break here. Ford has proved beyond a shadow of a doubt that these Auto Collections are failures and that their retail strategies and 2000 initiatives don’t work...totally rejected by the public. In Oklahoma City, the entire concept has fallen apart. They are advertising traditionally and separately, negotiating, sometimes not even referring to the Auto Collection and they are doing business the way they used to before Ford’s interference.

Jim Shroer, director of Global Marketing at Ford (who in no way resembles John Boy Walton) said that Ford is having a hard time convincing dealers that Ford seeks partnership, not diversity. No Crap! Imagine that. Could it possibly be because Ford is sending out mixed messages that indicate that their dealers are about to get screwed here? In Psychology, rule number one states that past behavior is one’s best indication of future performance. If Ford would stop genuinely stop dicking around with their dealers, maybe they could rebuild some of that lost trust.

I appreciate that the NADA was instrumental in the apparent progress we are seeing here…BUT…I sincerely hope that no lets their guard down. This is no time to get weak. Personally, I don’t trust General Motors or Ford.

Even though Ron Zarella and Roy Roberts personally accepted responsibility for the morale problems and the rift with the dealers, I don’t believe for a moment that Ron Zarella is sincerely penitent or that Roy Roberts has become "Warm and Fuzzy" overnight. Read my article in the September issue of this magazine "The Frog and The Scorpion" and remember this, the scorpion had to sting the frog, it was just his nature.

The "Dot-Communists" were all over the convention floor proclaiming the next big "Wave of the Future". Excuse me folks, slap some cold water on your face, take a deep breath, now exhale and take a look around for just a moment here. I am on record as saying that so far the Internet has been a major non-event as far as car sales go. Let me quote myself… "The Internet to date has not generated the sale of even one additional unit."

Sure, you need to be on the Internet. No doubt in my mind that Internet Sales are going to increase and you need to have a professional Business Development Center to handle all incoming and outbound phone sales as well as internet sales BUT, Do you really need all of these vendors turning your retail buyers into low-profit fleet buyers and charging you for the privilege. I’d like to see AutoByTel make a profit themselves before they continue to interfere with ours. Just how successful was AutoByTel.com founder, Pete Ellis, in the retail business before he started that company anyway?

I just read where AutoByTel.com is getting ready to start selling cars directly to consumers without using a dealer in the transaction. Let’s be sure I got this right now…According to the New York Times, AutoByTel plans to act as a car broker, selling cars directly to consumers in what they are calling "A Dealerless Transaction".

Whoa there, just a moment here! This sounds like a major "Double-Cross". The AutoByTel.com propaganda machine is claiming somewhere around 45,000 to 50,000 Internet sales for subscriber dealers monthly right? Now, are they saying they are going to use that information, paid for by these dealer subscribers to solicit customers out of that database and compete with their own subscribers?

First of all, I have a serious believability problem with the 45,000 to 50,000 sales a month figure...most AutoByTel statistics are probably the figment of some alleged J.D. Power research. (We all know what I think about J.D. Power alleged research.)

AutoByTel...Remember, we’re talking about a company whose stock has experienced freefall down from $58 a share to 12 3/8ths a share in less than a year as I write these words. Unless I am reading it wrong, AutoByTel.com posted a $4.9 million-dollar loss in the fourth quarter on only $12.4 million-dollars of revenue. Let me look that up that model in my business textbook here ...hmmm-mmmm...It referred me to "See...Smoke and Mirrors".

Prediction...Even with General Electric buying in, don’t waste a lot of valuable brain cells storing the name AutoByTel.com in your long-term memory. As the Fairy Godmother said to Cinderella "Poof!"

Speaking of "Poof"...Howabout them AutoNation Used Car Supercenters? Remember, I predicted three years ago that they would disintegrate within three years. In the July/August 1996 issue I wrote... "H. Wayne Huizenga had better stick to renting videos because he’s about to get his ass kicked in this business." At the time I recognized the obvious absurdity of that goofy business plan and I said so repeatedly. Now, I have got to tell you...It’s not over yet. I am sincerely looking for AutoNation to completely disintegrate and dismantle and the stores will be sold off within the next few years...I am going to predict two more agonizing and frustrating years for Huizenga and company. Their stock is in the toilet as low as $7.50 a share this month. Their business model is flying by the seat of their pants and AutoNation press releases feature more fantasy than was ever thought up by the Brothers Grimm.

As for their strategy of building a National Brand...The brand name AutoNation is now AutoWay in Tampa and who knows what else...where else?

CarMax...at a buck and a half a share...CarMax president, Austin Ligon, is saying that CarMax has the winning plan and that they are working toward profitability... "Working toward profitability?" Did this guy grow up in "Doodyville USA" or what? After seven years, it might be reasonable to assume that a company should be profitable...right? After seven years they are just trying to break into the black for the first time. To quote Groucho Marx..."If we don’t sell too many of these, we might break even." It might be fifty years or more before CarMax can even make a reasonable profit at this rate.

Well, it’s almost time for game and my son, Zachary, is getting excited. I really need to get in there with my family. I think I’ve said enough for one issue. Pouring myself a snifter of cognac, I wonder if the Auto Trader has any old Dodge Super Bees for sale.

More Food For Thought

Is it just me and my cynical skepticism, or did a blurb in The wall Street Journal last week carry the ominous tones that I read into it? The headline read "Car Makers May Try To Alter Prices".

The leadoff sentence stated that...Major auto makers are weighing whether to ditch longtime pricing practices to follow the herd of online car-retailing services by posting invoice prices or "street prices". Although not the only manufacturer alleged to be considering this, Ford Motor Company was specifically mentioned in the blurb I saw.

Street Prices are what consumers are actually paying for a car in the market...not MSRP. I smell the factories interfering with the retail process again. If they start further reducing margins and price setting, the dealers will once again get screwed.

 

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