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On the Point

Beyond the Sale

‘Da Man’ dishes out the shots this month, but there’s a rhyme and reason to his madness. Check out what he says about the Volt, Mazda’s leadership and more.

April 16, 2012

After 30 years of traveling, writing, training and speaking, you’d think I’d be ready to wind it down. Well, that’s just not going to happen, because there’s nothing more satisfying than doing what I do. Each day is unique and it never gets old.

I often think about a line from Arthur Miller’s “Death of a Salesman.” Turning to his son Biff, Miller’s protagonist, Willy Loman, said the following about being a salesman: “He’s a man way out there in the blue, riding on a smile and a shoeshine. And when they start not smiling back — that’s like an earthquake.”

And that’s the message I try to drive home when I’m training dealers, salespeople and managers: It’s not about units or even profits. It’s about accomplishments, challenges and the genuine relationships we forge with our customers. To be successful in sales, you have to earn it.

I bring up Willy Loman because I’m always amazed at that look of disbelief I get when I tell people this is a relationship business. But in case you still doubt me, just know that, as I write this, I’m preparing for a trip out to Dallas to meet with the Orr Auto Group. It has 18 dealerships spread throughout Texas and Louisiana, and I will be speaking to 80 of its managers and dealer partners on management processes and Internet marketing.

And you know what? My relationship with Keith Orr, the dealer, was sealed 25 years ago with a handshake. That was all we needed.

I’m also waxing philosophical because I’m looking at another surgery. It’s scheduled for March 19, which, of course, means I should be back in the game by the time you read this. This will be the third time my knee is going under the knife. I injured it 30 years ago while weightlifting. I fell with 700 lbs. on my shoulders.

I’m supposed to be laid up in the hospital for four days and out of action for another 10, but that ain’t gonna happen! Yeah, I dare the nurses to try to take away my cell phone and laptop. Hey, things are happening right now and I can’t be out of commission.

Choose Wisely

The dice just hit the backboard, which means our business is about to get really good or really crappy. All indicators point to an incredible year, with the seasonally adjusted annual rate tracking at 15.1 million units in February. The SAAR was floating around 14.5 million before that, which wasn’t bad either.

What absolutely amazes me is that dealers I talked to were telling me how disastrous February was going to be with about seven days left on the calendar. Well, it seems the floodgates opened after Presidents Day.

But you know what, I can’t help by chuckle every time I hear people speculating and prognosticating about why the industry’s rebound is so strong. Did it ever occur to anyone that interest rates haven’t been this low since 2007? According to BankRate.com, the average interest on a car loan sits between 3.1 percent and 3.9 percent.

Yeah, we’re looking pretty good right now, but here are five things that could derail a potentially great year:

  • Politicians: It’s an election year, and these idiots are in the business of making things look worse than they really are.
  • Gas Prices: Prices in mid-March were only 6 percent below the record high of $4.114 per gallon in July 2008.
  • Economic Meltdown in Europe: Most industry insiders agree Europe is already in a mild recession.
  • More Act-of-God Disasters: Look what happened in Japan last year.
  • Another War: Can’t we all just get along?

Shoots and Latters

I’ve written, spoken and screamed out in the wilderness about this for the last 10 years, and now, finally, even Consumer Reports agrees: Honda and Toyota have been subtly and gradually “de-contenting” their vehicles. That was the publication’s conclusion in its annual automaker report cards, which singled out Honda’s Civic and Odyssey as not living up to their predecessors. Consumer Reports did concede that Honda still builds one of the most reliable vehicles around. I interpret that to mean they’re good, but not as good as they used to be.

I’ve taken a lot of abuse over the years because I dare to cast aspersions on those two marques. So, this time, I’ll let David Champion, senior director of Consumer Reports’ automotive test center, do the casting for me: “While Japanese automakers still hold the Top 5 spots, their lead is shrinking. In some of Honda’s and Toyota’s recently redesigned models, cost-cutting has become more noticeable.”

I love them both, but these brands have a reputation to uphold. And we all know they’re cutting corners, removing content and making what was standard equipment optional. Sorry about the Yen, fellas, but you did ride high when the exchange was in your favor. Now you need to suck it up. I have too many Honda and Toyota dealers I call friends who rode through the storm with you, and they deserve nothing less than the best quality product. If you want to demand dealer investment in a quality facility, then don’t skimp on product.

Unsolved Mysteries

The big shocker, to me, anyway, was Ford’s freefall from the No. 5 spot to No. 10. I was less surprised to find Mercedes-Benz, General Motors and Chrysler at the bottom of the list. Then again, despite its score, Chrysler did lead the industry’s sales surge in February with a 16 percent increase.

The big news was Subaru’s average road-test score of 82. That was the highest score in Consumer Reports’ test results, ending Honda’s four-year run as the top-scoring OEM. And Subaru models were 100 percent recommended by the publication, which is unprecedented. But Subaru is another one of those Mazda puzzles: Why can’t a company that builds great cars capture dominant market share?

Speaking of Mazda, I can’t figure these guys out. The brand was rated as the No. 2 automaker by Consumer Reports, yet it has suffered through four consecutive years of losses. In fact, the company is expected to post a $1.3 billion loss for the fiscal year ending on March 31. They’re also laying off workers, buying out tenured employees and creating stock offerings to raise another $1.9 billion.

Again, if everyone says you have good product, why the losses? The reality is that Mazda has been out of the game since 1994. Now it’s putting all its chips on the CX-5, hoping the new compact crossover will drive a 22 percent sales increase and get the company to 300,000 units sold this year.

In fairness, the stateside divisions of Mazda have shown an increase, so the problem must be at the highest corporate levels back in Japan. Here’s what Jim O’Sullivan, president and CEO of Mazda’s North American operations, recently said: “Mazda is in the midst of an extremely challenging business environment. It has become necessary for us to reexamine our business to accelerate further cost improvements.”

Ziegler to Mazda: “There’s no problem on earth you can’t sell your way out of.”

Voice From the Past

So, I recently received a personal e-mail from Dick Colliver, former executive vice president for Honda. I would never reveal the contents of our exchange, but I will tell you we remain respectful of each other despite our disagreements on a host of issues. It was never personal.

I have stayed in touch with many former industry execs that I jousted with in the past. Former Ford Division President Jim O’Connor is still one of my better friends, as are former General Motors execs Pete Gerosa and Mark LeNeve. I admit I’ve never received sugar cookies or even a Christmas card from Jacques Nasser, Jim Press or Ron Zarella.

The Volt Revolt

Why are sales of the Chevrolet Volt so poor, and why was production shut down? Shuttering plant production for five weeks sends a clear message this car is in trouble, but why? Of course, I have my own opinions on the matter.

First of all, I am a raving fan of the Chevy Volt. It has incredible range and real fuel efficiency, not to mention the innovative and unique technology equipping it.

Please don’t interpret my thoughts on the Volt as an endorsement of General Motors’ management or President Obama. As a matter of fact, I believe the president’s support of the vehicle is one of the reasons sales have stalled. There is a large segment of the public who believe government has no place in our industry.

Now we’re hearing conservative groups calling the Volt “exploding Obama-mobiles.” Sorry, folks, not cool and not fair. We need this car to be successful. I don’t like politicizing this column, so let me be clear: I don’t like any politician right now. Heck, Richard Simmons would get my vote if he was on the ballot today.

My point is this: The Chevy Volt is the most incredible product in its class. It’s unfortunate that the vehicle has been politicized. And now the president wants to increase the tax advantage for anyone who buys a hybrid or electric vehicle (EV) to $10,000. You knew that was going to become a campaign issue, right?

Then there are the headlines from last November about the Volt catching fire. Those stories were stretched out of proportion, because the car sat for a millennium before the vehicle caught fire during the impact test. That wouldn’t have happened in a real-world environment.

The government concluded the car was safe, but the damage was done. Then the government reduced mileage claims on the vehicle to 95 miles per gallon despite GM’s claim that the vehicle got 225 mpg. Oops! Coming in at $40,000, the Volt is pricey, even with the tax advantage.

That being said, this current fuel crisis is not going away, especially with Brazil, China and India emerging as major consumers of gasoline. I’ve owned nine Escalades and seven Corvettes since 2000, and, believe me, I was kicking and screaming when I finally downsized. There’s just something less-than-manly about a guy driving a Fiat 500. Can you picture John Wayne climbing out of a little Scion IQ?

Humble Pie

I can’t tell you how many times I’ve eaten my words after shooting my mouth off, which was the case with Ford’s EcoBoost technology. I’ll never forget those Ford dealers in the audience yelling, in unison, “You gotta drive one, Ziegler.!”

Well, I did, and I am now a believer. The horsepower and fuel efficiency on the EcoBoost-powered F-150 was incredible. Jim Farley, vice president of Global Operations at Ford, was very gracious when I finally changed my tune, but I swear I heard him snickering behind my back. Hey, I deserved it.

Look, Chrysler, General Motors and Honda are leaning toward compressed natural gas as an alternative fuel, while Ford is standing behind its EcoBoost technology. As for the German makes, well, they’re getting behind diesel hybrids.

I have written repeatedly that I look for Volkswagen and Audi to become major players in the mainstream and luxury segments. And as you know, I also have written these franchises off as a comedy of arrogance and absurdity.

Well, the leadership at Audi/VW seems to have dialed in to the correct combination, which is why I believe these brands are the ones to watch outside of Hyundai and Kia. In fact, they’ve already committed $82.4 billion to product development and conquest business, which is why I officially proclaim them elite members of the Alpha Dawg Insider Club.

Looking for a Pulse

While looking for my friend Don Lavin on the show floor at the National Automobile Dealers Association’s convention in February, I stumbled into the Mitsubishi booth. The carmaker, by the way, is my candidate for the franchise most likely not to succeed. If anyone wants a blueprint on how to fail in the U.S. market, just Google “Mitsubishi business plan, 1990–2010.”

Is there still hope? Not only is there a pulse, a full recovery is highly possible. The guys I met in the booth were friendly and very passionate about their company. One of them gave me a complete walkaround and product presentation of the company’s new electric vehicle. The company calls it the Mitsubishi “i,” which is, of course, a stupid and unimaginative name.

The i, like most other electrics, takes 22.5 hours to charge and doesn’t go very far. So, it isn’t for people with lives or those who like taking long trips. Hey, it only has a 62-mile range. But if your daily commute is short, you can expect to go 100 miles for only $3.60 — or so they claim. Even if that’s exaggerated, I’d consider it for a second car. Heck, I might even keep one in the trunk of my Buick as a backup.

Data Wars

Not to keep beating the drum, but as you know, I’ve been traveling around the country speaking to dealer groups about data piracy. Dozens of vendors are accessing your dealer management systems to pull consumer and transactional data, and who knows what they’re doing with it?

Look, dealers are incredibly exposed from a legal standpoint. You have to stand up and protect your data. I have several keynote speeches scheduled on the subject. If you’d like me to come and speak to your group on this subject, just give me a call or e-mail me and I’ll be glad to help.

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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