Article

Beware the Future

November 2013, Auto Dealer Today - Feature

by Jim Ziegler - Also by this author

If you were to ask 1,000 people what James Bond looks like, most Baby Boomers would describe one of the actors who played him in the ’60s and ’70s, most likely Sean Connery. Some old timers might say it was Barry Nelson, who played James Bond in the 1950s TV series. Members of Generation X would describe Timothy Dalton or maybe Pierce Brosnan. I haven’t got a clue who would describe Daniel Craig. Great movies, but he just doesn’t look the part.

The point is, time goes on, even though we all tend to get stuck in an era we lived through. I always get a kick out of a story Paul McCartney tells from when he first met his daughter’s new boyfriend back in the ’80s. The young man politely asked McCartney: “Didn’t you used to play in a band?”
It’s OK to remember or even to love the way things used to be, but it is essential for all of us to move on. So don’t get stuck in the past, but be very wary of the motives of those touting new things.

The car business is never going to be the way it was again. Everything around us is changing and we need to go with the flow. After 38 years in the industry, I find myself constantly re-educating, re-inventing and learning new things. I am creating new processes, word-tracks and marketing innovations. Hey, we have to go where no one has gone before, right? And customer-friendly sales do not necessarily mean low profit or no profit.
dangerous minds

I am horrified at the mentality that is creeping into retail sales. Some people seem to think it’s immoral to make a fair profit. We have a parade of vendors and new-age gurus telling us the best way to sell is to show the consumer the invoice and negotiate on splitting the holdback.
There are a lot of frauds, offenders and pretenders trying to break into our business. Each of them claims to have reinvented the process. Yes, our industry is evolving, but real changes make sense because they happen for a reason.

Still, we have to navigate through the landmines set by the false prophets and outside “experts” who seem to think they’ve discovered new ways to retail and market our cars. I find it difficult to believe in or trust someone to teach me my business if that individual has never done it themselves. I also won’t believe those individuals who were in the business a long time ago. Hey, how is anyone supposed to know if that person was any good? That’s why I still work deals and interact with real customers in real situations in real dealerships.

F&I Targeted
Most of us are aware that the Consumer Financial Protection Bureau (CFPB) is conducting an extensive investigation aimed at eliminating rate participation in finance reserve profits. Truthfully, I’m surprised this hasn’t happened sooner. Remember, for most of my retail career, I was an F&I manager and department head. I was only a sales manager for one year.

The bureau claims F&I rate profit spread, or markup, paid to the dealerships is based on racial discrimination. Even though I know that is not true, I believe we are going to lose this battle in the end. I believe finance sources will universally adopt a flat rate payout per contract.

If you’ve followed my articles, you know I don’t think it’s all that bad. We’ll still make out OK and there will be a lot less strain and distrust. But now another situation is surfacing that you may not be aware of. The CFPB is also looking at reforming F&I product sales. This is where I believe they are overstepping their authority and interfering with our rights as retailers in a free market society.

Everything I have heard has led me to believe that the CFPB is going to launch a campaign to investigate and regulate pricing and disclosure of costs for F&I products and services. By what reason or logic can anyone justify forcing us to disclose the cost of our services to consumers?
This is one battle the National Automobile Dealers Association (NADA) and the state associations need to pay attention to.

Under Attack
Over the last 20 years or so, we’ve experienced a substantial boost to the national economy — the Southern states in particular — as many foreign manufacturers chose to build plants stateside. BMW, Honda, Hyundai, Kia, Nissan, Toyota and Volkswagen have built huge plants in Alabama, California, the Carolinas, Georgia, Mississippi, Ohio and Tennessee.

Meanwhile, GM and Ford have been busy building plants in China and Mexico. Although never stated out loud, I believe the reason GM and Ford are exporting American jobs is to escape the oppressive stranglehold of the United Auto Workers (UAW) union.

I was surprised to see the raw stats a few years ago documenting that Toyota and Ford were the two top manufacturers contributing jobs and revenue to the U.S. economy. General Motors was far down the list. Many people feel it was union excesses that made the domestic manufacturers uncompetitive and put GM and Chrysler on the path to bankruptcy just a few short years ago.

Today, the union still receives heavy favoritism from indebted politicians, but its power and influence have diminished. The UAW has undertaken a concerted effort to unionize workers in the international manufacturers’ U.S. plants.

The heat has been on in California, where even Toyota dealerships were picketed. The Japanese manufacturers have resisted unionization because their workers are, for the most part, well treated, well compensated and happy. It’s been tough for the unions to bust shops where the workers are satisfied.

Most recently, the UAW staged a full-scale assault on Nissan worldwide, targeting the OEMs workers in the United States, Brazil, France, Japan and South Africa. The union has gone so far as to send thousands of picketers to Brazil to embarrass Nissan as the country prepares to host the next World Cup and Summer Olympics.

The UAW is betting heavily on the support of international union brethren as it pours a major portion of its limited remaining resources into organizing this full-scale, worldwide assault on Nissan. If it loses this one, it would probably be a crippling blow to any serious future conquests.

The line in the sand is Nissan’s manufacturing and assembly plant in Canton, Miss., where 450,000 vehicles are turned out annually. The OEM is steadfastly resisting and appears to be holding out well.

Comment

  1. 1. J Heisig [ December 23, 2013 @ 03:45PM ]

    If unions are bad, please explain to me why Germany ( highly unionized) has a trade surplus many times higher then China? In comparison to the United States almost a billion dollar difference in the last 12 months.

 

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