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On the Point

Generationally Speaking

From outrage over factory-mandated image programs to TrueCar, ‘Da Man’ delves into the hot-button issues on dealers’ minds at NADA 2012.

March 12, 2012

Jim Ziegler accepts the “Passion Award” for lifetime achievement at the 2012 Digital Marketing Strategies Conference in Las Vegas. The award was presented by actor Adoni Maropis from TV drama “24.”
Jim Ziegler accepts the “Passion Award” for lifetime achievement at the 2012 Digital Marketing Strategies Conference in Las Vegas. The award was presented by actor Adoni Maropis from TV drama “24.”

Many of you may be too young to remember, but British rockers The Who were the symbol of rebellion in the ’60s and ’70s. I was a rock n’ roll disc jockey at WAPE radio in Jacksonville, Fla., and I met the group and played their music when they were still on the charts.

The band’s defiant spirit was best expressed in “My Generation,” the seminal anthem that declared we were different and needed to be addressed differently. We were rebelling against everything that went before.

I bring up The Who and the song not just because Gen X and Y were a major topic of discussion at this year’s meeting of the National Automobile Dealers Association (NADA). I bring it up because, well, you’ll see.

The Magic Is Back

This year’s NADA convention was, by far, the biggest, best attended and most exciting in recent memory. The number I heard was 23,000 dealers, managers, vendors and industry executives crammed into the Las Vegas Convention Center for the sold-out show.

My wife Debbie and I haven’t missed the convention since the first time I spoke at the show in 1987. It was in San Francisco that year. My involvement this year marked the 15th time I’ve presented at the conference.

This year, I presented “20 Persuasive Ways to Sell F&I Products.” It was all about word-tracks and closing techniques. I guess you can say I went back to my roots. The fourth session was for international attendees, which was really a step outside of my comfort zone.

The room was packed with every conceivable nationality, which meant there were four booths at the back of the room occupied by translators. It’s somewhat disconcerting to speak to a room full of people wearing headsets, but what’s worse is that I realized humor doesn’t translate too well. I was standing at the front of the room cracking myself up, but nobody else was laughing. It couldn’t have been that bad since I was hired to speak at the Brazilian National Automobile Dealers Convention this summer.

Debbie and I flew into Las Vegas two days early so I could attend and present a session at the digital marketing conference that preceded the NADA Convention. To my surprise, I was invited onstage to accept the conference’s “Passion Award” for lifetime achievement. The award was presented to me by Adoni Maropis, the actor who played Abu Fayed on TV’s “24.” I’ll admit I was a little nervous when I accepted. Hey, he played a pretty convincing bad guy on the show.

The Hot Button

By far the biggest issue discussed at the convention was the pressure factories are putting on dealers to upgrade their facilities. Beginning with outgoing NADA Chairman Stephen Wade’s farewell address to the dealers, there were a lot of mixed emotions. Yes, people congratulated Wade for his work last year, but there also was anger over the way NADA is handling this facility upgrades issue.

Handing the gavel over to the 2012 NADA chairman is Stephen Wade, the outgoing chairman. Regarding factory image programs, Wade said the industry must tone down the rhetoric.
Handing the gavel over to the 2012 NADA chairman is Stephen Wade, the outgoing chairman. Regarding factory image programs, Wade said the industry must tone down the rhetoric.

See, under Wade’s leadership, the association commissioned a study about the effectiveness of factory image programs, and whether they led to increased sales and profits. The move was welcomed and supported by dealers.

But try to visualize the emotions and frustration dealers are feeling about overbearing mandates to standardize dealership facilities down to the color of the grout between the floor tiles. “Enough is enough” seemed to be the prevailing sentiment.

And it was the following statement made by Wade that caused a large portion of the audience to turn on the outgoing chairman: “OEMs and experts alike must tone down the rhetoric. If we cannot find a sensible way to resolve our differences over factory programs, we will end up settling them in the courts and in the state legislatures.

“And I’m not sure many of us want to see even more government control and regulation of our industry. In Glenn Mercer’s words, we’ve moved beyond impassioned argument to counterproductive antagonism. I couldn’t agree more. Let’s call a halt to this chess game of states passing laws to protect dealers, then manufacturers implementing new programs to work around the state laws.”

Many of the dealers and even some association executives I spoke with saw it as the NADA running away from another battle. I was personally disgusted, but I wasn’t surprised that so many manufacturers are clueless about what makes retail work. Some of the executives are out-of-touch with the realities of the business and don’t begin to understand until they’ve been in the industry for a few decades. Unfortunately, that’s when they retire or are replaced by a fresh crop who head down the same stupid path.

Even John Krafcik, CEO of Hyundai Motor America, remarked that his company was asking dealers for reasonable facility upgrades, but not to the extremes that other manufacturers are requiring. When I say other manufacturers, I’m talking about General Motors. Even though the company has posted incredible profits, they once again, for some unexplained reason, feel compelled to start disrupting their dealers’ operations. Basically, they’re requiring incredibly expensive and excessive facility upgrades even as they continue to suppress dealer margins.

Take my good friend Martin NeSmith of Jesup and Claxton, Ga. His story is one of many horror stories in which the “GM faithful” are persecuted by the manufacturer’s obsessive drive to micromanage and dominate retail dealers. I had an opportunity to speak briefly with him at the convention and I was pleased to see he was being interviewed by another auto news publication.

See, the industry is dealing with complex issues, as manufacturers continue to shrink dealer margins to unconscionably low profits per retail unit sale. And it’s already impossible to make a profit on the sale of a new car.

Earl Hesterberg of Group 1 Automotive and Mike Jackson of AutoNation both spoke on the issue in Las Vegas. Eliminating stair-step incentive programs has been Jackson’s crusade for more than a year now and I believe we should all stand up and have our votes counted on this issue.

See, every one of the instigators has some bogus stair-step program that incentivizes dealers to increase volume by lowering prices (and value of the cars). This race to the bottom is the fuel that drives perceived parasitic companies to prey on dealers (i.e., TrueCar).

General Motors, Chrysler, Ford and Nissan have all been guilty throughout the last few decades of rolling out these type of programs, beginning with the notorious Ford Blue Oval program in the ’90s. I believe General Motors’ current version is called the “Essential Brand Elements” program.

In my opinion, it all boils down to two-tiered pricing. By concept, this is illegal and should be investigated. Unfortunately, it appears the current administration is politically incentivized to look the other way.

The perception that the NADA is softening on this issue is something we all don’t want to believe. Look, I am and will always remain a friend of the NADA, as well as a champion of dealers, but this had to be said.

I also was and always will be a raving fan of Mr. Tonkin’s NADA chairmanship. He was one of the best at standing up and saying what was on his mind, and he certainly took on the OEMs when they were wrong. Of course, I’m talking about my friend Ron Tonkin. I’ve got nothing against his son Ed, the association’s 2010 Chairman, but his old man and I have been friends for 30 years.

War Paint

The annual American International Automobile Dealers Association (AIADA) luncheon is one of those convention events that always brings me up to date on upcoming industry trends and events. This year, the theme was gearing up for the election-year politics, which are expected to focus negatively on international brands. The feeling is that the Obama Administration has taken a decidedly overt bias stance against imports and international brands.

Jim Smail, outgoing AIADA chairman, was upfront in mentioning President Obama’s apparent snub of international brands at the Washington Auto Show the week before. It seems Obama had invited international automakers to showcase their green, hybrid and electric vehicles, but walked right past them at the show. He then spent his entire time at the show being photographed with domestic trucks and performance cars. I guess Kermit the Frog was right: It’s not easy being green.

Word on the show floor is that international nameplate dealers are so angry with the President that they’re formulating a battle plan to counter the perceived favoritism. This should be interesting.

Generation Wars

Another big topic at the show was the idea that dealers need to learn how to sell to and manage Gen Y and X, retro-boomers, late bloomers, gloom and doomers, silver-spooners and all of the other entitlement generations. During one workshop, I heard a supposed visionary tell the audience that the best way to manage Gen Y employees is to create flexible work schedules, provide light supervision and offer a guaranteed path to management. 

Hey, every generation has declared independence and rebelled, but they eventually grew up to be their parents. I’m sorry, but I think all of this talk is bogus.

Data Wars

For those of you who don’t already know, I began a concentrated campaign to educate dealers and industry executives about the dangers dealers face by doing business with TrueCar. Just to clarify, this campaign is not and never was about vehicle pricing. It’s about the data that so many vendors are extracting from your dealer management systems (DMS), and that’s been my beef since I started this crusade in November.

And in what looks like a response to the backlash, the TrueCar folks announced in January that they are abandoning their original business model and will, from this point forward, offer a subscription-based model without pricing.

But just when it seemed like TrueCar finally got it, I found out they still insist on having a connection to the DMS. It’s clear to me that TrueCar hasn’t reformed or even changed. They’re just laying low until the noise dies down and they can go at it again with the same tactic. So, pay attention and make sure your dealer and general manager reads this column.

Remember, your data is your “blue sky.” Your customer database is incredibly valuable and, if you’re not careful, you could be allowing vendors to steal your legacy. Recently, I learned that one dealer had more than 79 vendors extracting information out of his DMS. It’s out of control and you are legally liable for this if a consumer files a lawsuit.

Some of the vendors are reselling your customer’s personal identifiable information, while others are selling your transactional data. Eventually, some dealers are going to be sued because they did not keep a close watch on what was going in and out of their systems.

Remember, you are the one who signed privacy agreements with your customers, not TrueCar or any other vendor. So, if I was you, I’d call my DMS provider and demand a complete systems audit of every vendor that was extracting data from my system. And check your vendor contracts. You might find that some of them own your customer data if you’ve signed it away. And this goes for direct mail companies, CRM and Internet lead providers. In fact, there could be companies you stopped doing business with years ago that are still tapping into your data.

Think about it: How does that little fox get your repair orders when you never gave anybody permission to get into your system? Well, I bet your service manager or, maybe you, accidentally signed a document with buried clauses that let the fox in.

It’s time to wake up, kick your dealer associations in the butt and tell them to get on it. We need legislation against data aggregation and the resale of customer information to third parties.

One last note: Beside the fact that my New York Giants prevailed at the Super Bowl, the best part of my NADA experience was something that happened inside the Caesars Palace casino. My wife, now known as “Double-Down Debbie,” hit four aces on a single hand. I have been playing Crazy Four-Card Poker for nearly 20 years and I have never seen that happen, and neither had the dealer.

So, what did she win? Well, she had $25 on all three spaces and her hand paid out 200-to-1. I’ll let you do the math on that one. Well, that’s my convention experience in a nutshell. E-mail me with your thoughts. I’d love to hear from you.

Jim Ziegler is the president of Ziegler SuperSystems Inc. E-mail him at jim.ziegler@bobit.com.

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Author Bio

Jim Ziegler

President & CEO of Ziegler SuperSystems

Jim 'Da Man' Ziegler joined the magazine in 2011 to deliver his On-the-Point message about the car business to dealer principals and store managers. He'll offer strategy advice on everything from sales and F&I to marketing in the digital age. Catch him every month at www.fi-magazine.com.

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