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On the Point

Figures Lie and Liars Figure

August 7, 2012

The Toyota Camry SE was voted Most "American" Car in 2012 by Cars.com.
The Toyota Camry SE was voted Most "American" Car in 2012 by Cars.com.

When I first sought employment at a car dealership back in 1976, I was leaving behind a career as a successful advertising sales manager. Becoming a salesman, at least in my mind, was a temporary escape from my responsibilities as an executive. I guess I figured I could get in and out of the business before any of my relatives found out I was selling cars.

Like most people, I had a lot of preconceived notions about what kind of people manned a dealership. I soon discovered that everything I knew about the business wasn’t true at all. Rather than a fraternity of criminals, I discovered a community of real characters who, as it turned out, would be the most honorable and honest people I’ve ever associated myself with.

If you survey the public, most consumers would say car salespeople aren’t the brightest of individuals. That stereotype has been perpetuated, kept alive and magnified by people with an agenda. But we have gone more than that extra mile policing our industry and raising the level of ethics and standards. I am proud of who we are and what we do.

Truth is, you need to have an incredible amount of specialized knowledge to be one of us. Most people are not capable of performing at the mental, self-motivated, high-energy levels the job requires. I guess that’s why we have such high turnover.

So many people confuse education with ability. Academic achievements are of little value in the car business. You can hang your diploma on the wall in your office as a testament that you stuck it out for four years, showed up to class and passed. In this business, however, we are paid for personality, persuasion, productivity, service and finesse — in other words, people skills. That doesn’t mean I haven’t met college-educated individuals in the car business. I have, but education doesn’t necessarily equate to street smarts, common sense and the ability to relate to people.

That’s why I launch into fits of anger when vendors, who make their living off of extracting our customer data and reselling it back to us, run commercials stereotyping us as criminals and con artists. So many dealers and even manufacturers are doing business with companies that take our money and our data, then turn around and deliberately damage our reputation by creating distrust for what we do among consumers.

Pants on Fire

Not since my friend Pete Gerosa accidentally miscounted Cadillac sales to beat Lincoln back in the ’90s has the luxury segment competition been as cutthroat and devious. Based on reports from Bloomberg and The Detroit News, it appears Mercedes-Benz and BMW are locked in a neck-and-neck race for market share supremacy. The Bloomberg headline read: "Mercedes Sales Rise 7.6% in June, Extending Lead Over BMW in U.S."

If you’ve been following my articles, you know I’ve been predicting that the heat would ratchet up in the luxury segment as the near-luxury category gains momentum. Well, it seems Mercedes was eating BMW’s dust in recent reporting periods, lagging in both sales and market share. Having briefly dealt with the aggressive mentality of the German executives at Mercedes when they owned Chrysler, I can tell you they consider this a major crisis.

Now, what if those sales numbers I previously quoted were bogus? Would it be possible for someone to stuff the ballot box? Uh-oh, shades of Chicago elections, Batman. That’s right, I’m invoking the dreaded B-word, as in "bogus." Of course, I might be wrong. But let’s consider the evidence.

First, Mercedes "allegedly" beat BMW by a mere 506 units in June. It wasn’t a runaway landslide of reported sales. The key word there is "reported."

Now, here we have Mercedes’ U.S. executives taking bows. "We achieved our highest half-year sales in our 47-year history," Steve Cannon, the automaker’s new U.S. CEO, wrote in an e-mail sent to dealers and the media.

I almost spewed coffee through my nose when I read quotes from Jesse Toprak in several news articles. The Detroit News referred to him as an industry analyst with TrueCar.com. TrueCar? Industry analyst? Please. I guess we just have to believe the sound statistical analysis coming out of such a trusted source. Well, here’s Mr. Industry Analyst’s take on Mercedes’ performance: "They certainly outperformed expectations." Compelling, right?

Toprak attributed Mercedes’ dramatic sales surge to its aggressive lease specials and incentives. Translated, he means Mercedes made a real, conscious effort to get volume up in the first half. I guess it was another one of those locker room speeches factory guys are known for.

My take might be a bit different than Toprak’s. Then again, I don’t have access to the raw data I believe TrueCar extracts from dealer point-of-sale systems. However, I do speak to literally thousands of dealers and dealership employees. With more than 100,000 friends and followers on my social networks — most of them in our industry — I’m able to see and hear from many credible and informed sources.

Let me tell you a hypothetical story. See, there was a time back in the ’80s when some Toyota distributors were driving for market share in the U.S. market. As the story goes, Toyota dealers were ordered to sell large portions of their inventory to their own leasing company to register as a sale. They were then told to sell the same units to retail customers as pre-owned program cars.

2012 Ford F-150 Platinum
2012 Ford F-150 Platinum

Of course, that hypothetical story hypothetically took place nearly 30 hypothetical years ago. Well, what if, still hypothetically speaking, a manufacturer told its dealers to put a huge numbers of cars into loaner service even if it was for only one day? And, what if it even gave the dealers huge incentive money, say $8,000 per unit to do that?

Nah, that wouldn’t happen. That’s just fantasy. If something like that really did happen, it would be easy for a genuine industry analyst to uncover, right?

Of course, I am certain lease incentives and dealer cash probably drove a lot of conquest new-car sales, no doubt about that. But what if we’re talking about a difference of 500 units? That’s close enough for a hypothetical situation to make a difference. That’s if it were really hypothetical, which, of course, it is, right?

There is a dark horse in this race coming up really fast from the back of the pack: I predict Audi will be among the top three luxury nameplates in less than two years. Reading all available data related to this story, it was barely noted that Audi has now surged ahead of Cadillac in the luxury segment and is moving up every month.

In a press release, Audi CEO Rupert Stadler stated that Audi aims to become the world’s largest maker of premium cars by no later than 2020. What caught my attention was that he said the company’s goal was to overtake BMW as the world’s largest producer of luxury vehicles. Notice how he didn’t mention Mercedes? I did. Let me just throw Lincoln in the equation, too, because I believe it will be competitive in that segment in the foreseeable future.

Of course, the wild card in the luxury deck is Lexus, which realized an 86 percent increase in sales in June now that it’s back to full production.

2012 GMC Acadia SLI
2012 GMC Acadia SLI

Domestically Speaking

I used to think that if you drove a Ford, Chevy or Chrysler, well, by George, you were buying American. That was until I took a look at Cars.com’s American-Made Index, as well as the accompanying report by Kelsey Mays.

His report centered around accumulated data on what percentage of a vehicle is made with domestically produced parts and domestic labor in domestic plants (Canadian-built parts and assemblies are considered "domestic," by the way). And from what I understand, 75 percent of a vehicle’s content must come from here to be considered U.S.-made.

So, which vehicle is the most American-made automobile? Drum roll please: the Toyota Camry, which is built in Georgetown, Ky., and Lafayette, La.

I bet there are a couple Bubbas out there who just swallowed their chaw. But yes, even though the company ships its profits to Japan, the carmaker has created more jobs and product for the economy than any other OEM. Here are the other Top 10 American-built vehicles:

2. Ford F-150: Built in Detroit

3. Honda Accord: Built in Marysville, Ohio

4. Toyota Sienna: Built in Princeton, Ind.

5. Honda Pilot: Built in Lincoln, Ala.

6. Chevrolet Traverse: Built in Lansing, Mich.

7. Toyota Tundra: Built in San Antonio

8. Jeep Liberty: Built in Toledo, Ohio

9. GMC Acadia: Built in Lansing, Mich.

10. Buick Enclave: Built in Lansing, Mich.

Of course, if you’re driving a Chrysler product, you know it’s an Italian car. However, Sergio Marchionne is shopping for more domestic production.

I did hear that General Motors (partially owned by the U.S. government) has filed a protest with Cars.com over the report. Here’s what an unnamed General Motors’ executive allegedly said: "If they’re going to count parts and cars built and produced in Canada, we feel it’s only fair to include those built in Mexico and China where we have exported a lot of formerly "domestic jobs." Of course, that might just be an unfounded rumor.

All humor aside, I strongly urge you to get a copy of this report from Cars.com and thoroughly read who’s putting money into the U.S. economy, who’s exporting jobs and who’s not.

2012 Chevrolet Traverse LTZ
2012 Chevrolet Traverse LTZ

Secrets Revealed

I just read an "authoritative" report on how to make greater profits on used cars. I bet you’d like to know the answer, wouldn’t you? Well, if you want to make money on used cars, the report I read suggested that you stop reconditioning them. Well, dang, why didn’t I think of that?

The second way to improve profits, again, according to the report, is to use off-brand parts to recondition vehicles. Now that’s pure genius. Put cheap, maybe even counterfeit, parts into those units and you’re on your way to better profits.

This theory is being advanced by one of those new-age prophets of no-profit. The theory is simple: You can’t make money on used cars anymore, so we’ll help you sell more for less. And if we don’t sell too many of these, we might break even after you pay us to help lower your profits.

This guy says most people pick out their cars from pictures they see on the Internet, which means they won’t be able to tell from a photo whether it’s been reconditioned or not. Heck, why not just Photoshop out all of the defects on the car and make it look like new? All you have to do from there is make sure you set appointments to show the car at night, preferably in the rain. Be sure, though, that the customer signs the "Sold As-Is" disclaimer in triplicate. Lastly, tell the customers you will stand behind the car you sold them, because it’s too dangerous to stand in front of it since you didn’t fix the brakes.

Excuse me, but what are you people thinking and what are you drinking? We’re in the customer satisfaction and integrity business here, if you didn’t know.

Stop It Already

As you’ve read in past issues, I’ve had more than a few things to say about why the electric vehicle isn’t selling. So you can imagine my astonishment when I read a report from Pike Research predicting that there will be one million electric vehicles on the road by 2018. Heck, even President Obama is in the prediction business. He believes electric vehicles will hit that mark by 2015. Well, it doesn’t look like that’s going to happen despite the billions of dollars in grants, loans to technology companies, government subsidies and rebates.

Look, electric cars are not going to sell until and unless the government forces them on the public, which appears to be a very real possibility if the election goes the wrong way. As of now, electric cars are not only not selling, the numbers are actually dropping.

That’s not the case with hybrids, which are flying off lots while Nissan dealers can’t give away the all-electric Leaf. In fact, Leaf sales fell 69 percent in June vs. a year ago, with only 535 units sold. And that’s not going to change with the vehicle’s current technology.

Stop Being a Mushroom

Mushrooms are best if you keep them in the dark and feed them bull crap. Well, it seems that’s what many vendors, some manufacturers and their armies of alleged statisticians are doing to dealers. They’re pushing you in a direction they want to go because it’s more profitable for them.

My advice to you is to start looking around and using common sense with what you know to be true. There are people telling blatant lies to manipulate the market and they use what they pass off as research to prove it.

I just read another stupid article about Generation Y and the Millennials and their buying habits. Such crapola. The latest slant is the demographic doesn’t want to drive cars because their parents were overprotective or some nonsense like that. I guess we are to interpret that to mean that we need to stop trying to get them in and sell more from pictures on the Internet.

Splash some water on your face and take a breath. Now, let me ask you, is that what you’re really experiencing in the real world? You know, if you feed it too much, a guppy will keep eating until it dies. So, stop being such a guppy.

Well another article winding down, a couple shots of vintage Rémy Martin, 100-year-old Louis XIII cognac and a short break to watch the Maury show (Phew! Jermaine was not the baby’s daddy). Keep those e-mails and letters coming, and feel free to call me anytime. I’m always glad to hear from you.

Jim Ziegler is the president of Ziegler SuperSystems Inc. E-mail him at

jim.ziegler@bobit.com.

Comments

  1. 1. Chris Bonilla [ August 14, 2012 @ 07:57PM ]

    Well spoken Jim! Great article, I'll share with others...

  2. 2. Dale Yandell [ August 15, 2012 @ 09:59AM ]

    Once again my friend Jim proves why he is the Alpha Dawg of the car business, and btw thanks for the compliments.

    Dale

  3. 3. Tom Gorham [ August 17, 2012 @ 11:12AM ]

    Wonderful analysis as always Jim.

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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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