The Industry's Leading Source For F&I, Sales And Technology

On the Point

Sharpen Your Survival Skills

‘Da Man’ has a plan you can use to survive the collapse of the car business and remain profitable through the dealer apocalypse.

July 7, 2017

It was only a few months ago that every expert, analyst, automobile industry pundit and alleged researcher was predicting numbers as high as 20 million new-vehicle sales in 2018. What were these fools smoking? They can’t all live in Denver, can they?

The Trump election should have taught the world that you can’t trust polls and researchers to tell the truth — especially when they have a vested interest in the outcome and they trade in deliberately false pseudo-information.

"There simply aren’t enough customers in the pipeline. We buried them in 72- and 84-month loans with no down payments. They have no hope of getting out in this trade cycle or the next. We refinanced negative equity on three generations of trade-ins. Cheap used cars are going to totally kill new-car sales and the auctions."

Well, enough of that. It’s here. The retail car business is crashing in spite of the soaring stock market. Sorry, Bill Clinton, but it’s not the economy, stupid. It’s saturation.

The manufacturers have glutted the market with overproduction. The tsunami of off-lease vehicles and fleet returns is totally destroying the pre-owned market. This, in turn, will destroy the new-car market for the foreseeable future.

There simply aren’t enough customers in the pipeline. We buried them in 72- and 84-month loans with no down payments. They have no hope of getting out in this trade cycle or the next. We refinanced negative equity on three generations of trade-ins. Cheap used cars are going to totally kill new-car sales and the auctions.

Now that the manufacturers are suddenly realizing the bear is going to eat them, they are laying off workers and cutting back on shifts and production. China is the only good market left.

Last week, I was a guest on an online talk show with John Marazzi, the general manager and managing partner at Brandon Honda and Sun Toyota in Tampa, Fla. Along with the host, David Villa, we discussed how to stay profitable when there’s a slowdown and contraction in retail sales. Here’s what we came up with:

1. Expenses, expenses, expenses: Get ahead of the curve and tear apart every line of your financial statement with your office manager and controller present. Ask questions!

2. Hold your vendors accountable for ROI: Some of your long-term partners laid down on you a long time ago. You’re just doing what you’ve always done. You aren’t inspecting what you’re expecting. Be tough and fair. Fire unproductive service providers, regardless of how much you like them.

3. Renegotiate everything with everybody: I’m talking about every vendor, from lead providers to uniform rentals. Take bids from their competitors. And don’t take any crap about “attribution” or “influence.” Just show me the click-throughs.

4. Training, training, training: It’s all about people and processes. Get quality people and quality managers and train them in your exact process. Then hold them accountable for their performance. No exceptions!

5. Marry your CRM: The CRM is the heartbeat of the deal. No one is exempt from using it to its fullest capacity. Follow the process your CRM dictates.

6. Mine for data and equity: Your past customers are your best and cheapest source of new business. Revive the dead leads in your DMS and CRM. Get a data-mining program and use it.

7. Get a kick-ass website: Your website should load quickly, look good on a smartphone, and be SEO-optimized. Unfortunately, manufacturer-mandated websites are just a couple of notches above worthless. Use it if you must, but commit to building a second, more dynamic website of your own.

8. Know the lingo: Familiarize yourself with terms such as “SEO,” “SEM” and “local search.” Make sure they are yielding results on Google AdWords. (And never let an employee own your passwords or logins.)

9: Buy organic: Be sure your dealership is high in Google’s organic (i.e., unpaid) search results. The vendors have stolen the first half of your page in every category. You can only hope to come in above the fold. If you are not on the first page, you are invisible.

10: Be social: Social media has come of age. Pay-per-click and targeted marketing is more productive and cheaper than anything else you’re doing.

As I have said many times, you’re going to eat or be eaten in the coming months. The bear is coming. This is your survival plan.

Jim Ziegler is the president of Ziegler SuperSystems Inc. Contact him at [email protected]

Comments

  1. 1. Marty [ July 11, 2017 @ 12:31PM ]

    Sorry Mr. Da Man, but IT IS THE ECONOMY.
    Why did you bury people in 72 and 84-month contracts? Because that was the only way you could get them anywhere near close to a monthly payment they could afford. They had no savings so they had no down payment other than their beater in trade. And if it wasn't for huge incentives that were used for down payment assistance, their deals would never have been bought. And keep your politics out of this.

  2. 2. Jason [ July 12, 2017 @ 07:33PM ]

    Spot on..... Definitely all areas we are focusing on.... Thanks for the Read!

  3. 3. Richard [ August 19, 2017 @ 11:15AM ]

    This is all great stuff but none of it really relates to the F&I office does it?

Comment On This Story

Name:  
Email: (Email will not be displayed.)  
Comment: (Maximum 2000 characters)  
Leave this field empty:
* Please note that comments may be moderated.

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.

» More