December 2013, Auto Dealer Today - Feature
There’s something magical and mystical about New Orleans. I lived there for a year once. I was only 20 at the time, and every day was an adventure. Of course, I celebrated my 21st birthday on Bourbon Street. Young, dumb, intoxicated and … Well, you get the picture.
Every fourth year, the National Automobile Dealers Association (NADA) rolls back around to “The Big Easy” and I find myself filled with anticipation. The New Orleans conventions are always the best.
I’ve attended every single one since 1987. I remember conventions in Atlanta and Dallas before they settled on the rotation between San Francisco, Orlando, Las Vegas and New Orleans. San Francisco is okay, but I never cared much for the conventions in Orlando. I am totally burned out on Vegas.
But I still love New Orleans, where the only rule is to laissez les bon temps rouler — let the good times roll! From the food, to the atmosphere, to the rich history and heritage, the city screams “party.” And when the car dealers come to town, we do exactly that. It’s fitting that we return to New Orleans for this year’s convention, when our industry is riding high and times are good. Some of us remember the last time we were here, when the mood was less optimistic.
I remain a loyal advocate of the NADA. We are not always in agreement, but I’m a staunch supporter. No one says dealers have to agree with every move made by their representative bodies, but this is your national organization and you need to be there and participate.
For the most part, business is accelerating back toward record levels. With a few exceptions, dealers across the country are realizing great sales and profits. Even Mitsubishi seems to be rising up from the dead ... again.
A few years ago, I wrote that Sergio Marchionne, CEO of Fiat S.p.A. and then-newly appointed chairman and CEO of Chrysler Group LLC, was either a genius or a crackpot. There’s no in between with that guy, and my opinion of him still changes daily. These days I am leaning toward “genius” but, then again, a storm is brewing and I wonder whether he’ll be able to navigate through it.
First things first: my Chrysler dealers are ecstatic. They’ve got great product and dramatically improved consumer perception. Marchionne’s marketing has done more for their franchises than his engineering and design departments. Eminem’s “Imported from Detroit” spot and Clint Eastwood’s “Halftime in America” campaign were incredible and helped turn Chrysler’s image around.
Unfortunately, the Sergio Magic hasn’t quite done the same for Fiat. We might be witnessing a train wreck in the making.
Many Chrysler dealers are also Fiat dealers, and they are in an entirely different mood. When I speak to dealers who invested in Fiat franchises, I always envision that old Frankenstein movie, only the angry mob of villagers is chasing Marchionne up the mountain.
In defense of the Fiat, they make a great little car, and they should be proud. I’m not totally okay with the price point, however. Perhaps they’re a little too proud. But facts are facts, and less than half of Fiat’s franchised U.S. dealers are profitable after nearly two years of promises and adjustments to the marketing strategy. As I’m watching this debacle, I wonder: Can Marchionne pull another rabbit out of his hat?
He would be wise to remember what happened to Suzuki. They made a great small car. There was no market for great small cars, so they became the flagship models for used car lots masquerading as franchised dealerships. Suzuki earned the reputation of a “special finance car” that you could always stuff a credit-challenged customer into.
That is not the image Fiat wants. If the 500 gets that special finance stigma, it would be a disaster. As far as I know, Hyundai and Kia are the only brands that successfully restored their image after being slapped with that label.
Fiat also makes great TV commercials. I like the one where the sexy Europeans drive under the ocean and pull up on the U.S. coast. But no campaign has translated into real sales. The five-door Fiat 500L was supposed to be the answer, and initially it seemed to have momentum. But that momentum was short-lived, and sales took a steep 30% nose dive with a downward arrow after the first six months.
It’s no secret that U.S. sales are propping up the corporation internationally — and we’re obviously talking about Chrysler here. Marchionne has been scrambling to put out fires globally while the weak European economy drags him down.
Many of us remember when Fiat was ridden out this country on a rail years ago because of poor quality issues. The same thing happened to Alfa Romeo. There was no guarantee that consumers would accept Fiat’s reintroduction to the U.S. market. The dealers who stepped up to the plate were taking a big chance.
They also spent a significant amount of money. In the beginning, the Italians acted like each dealer was opening a new Saks Fifth Avenue. The OEM insisted on dedicated showrooms and service departments. Now, of course those expectations have been greatly relaxed. Chrysler dealers are doing whatever it takes to justify their Fiat franchise. There are certainly not a lot of buyers lining up to take them off their hands.
But the biggest kick in the teeth, dealers tell me, is that they were operating under the impression — whether expressed or implied — that they would get Alfa Romeo points when that marquee was reintroduced. Chrysler indicated as recently as early 2013 that Alfa Romeos would be sold by top-performing Fiat dealers. In November, however, we learned that the long-awaited Alfa Romeo 4C sports coupe will instead be sold through Maserati dealerships. Do you blame Fiat dealers for feeling betrayed?
I’m not counting Marchionne out just yet. He might be on the ropes, and he might look a bit wobbly, but we’ve seen this guy pull off miracles in the past.
That reminds me of another movie. This time, it’s Rocky Balboa trying to climb up the ropes and get back on his feet after Apollo Creed knocked him down … again.
Awaiting the Counterstrike
Automotive marketing firm Digital Air Strike is under attack by an anonymous blogger who claims to be a rogue employee. Jim Ziegler believes the blog could be the work of a malicious competitor, a charge the blogger refuted.
Digital Air Strike is either the innocent victim of a vicious slander campaign or a train wreck unfolding before our eyes. The Sunnyvale, Calif., company, which specializes in online marketing for auto dealers, is in the midst of a growing scandal.
The story began last February, when an unsigned WordPress blog appeared online and began to circulate around the industry. The author claimed to be an employee who decided to blow the whistle and accuse the company of misconduct, fraud and other unseemly activities. He became more prolific as the year went on.
The only rebuttal I’ve heard so far is that the blog is nothing more than a malicious attack by an unnamed competitor. That was my initial reaction, and I made my suspicions known in November. The blogger denied those charges and even named yours truly in his response, thanking me for the “sweet compliment.”
Let me make this perfectly clear: I am not saying that any of the allegations or rumors about the company are true or false. That question is not even at the heart of the issue. What is disturbing to me is that I’ve seen no public response from Digital Air Strike.
I have received messages on the subject from mid-level managers at two major manufacturers. Both said I should back off on writing or saying anything about Digital Air Strike. I can understand why. The fact that a number of the OEMs and other vendors are deeply involved with the company is at the heart of this mess. When manufacturers get nervous about something like this, there’s a reason.
If your OEM gets into bed with a third-party company, approves them as a preferred vendor and entices you and your fellow dealers to do business with them, will they stand up and take responsibility if the vendor does something to damage the dealer-customer relationship?
For now, let’s assume that the accusations leveled against Digital Air Strike are false and the source is unreliable. But if that’s the case, the author has certainly made it believable. As I said, I’m waiting for an item-by-item denial from the company’s officers.
The Data Wars Heat Up
All of a sudden, it seems as if bombs are dropping all over the technology vendor battlefield. So, once again, I ask the question at the heart of the matter: How many of your vendors are you paying to sell your customer data to other vendors, your competitors and even the manufacturers?
Bear in mind I am not singling out any specific company or vendor. It’s an epidemic and there are multiple offenders.
Personally, I believe we’re all getting a little tired of technology pirates stealing your business. It could be the alleged lead providers who use your inventory as bait to get car shoppers to fill out their forms. It could be the vendors that scrape information from your website or lift it from your DMS.
As dealers and car people, we need to rise up as one and say, “Get the hell out of our data!”
So many of the culprits are buying and selling your information to each other, reprocessing it, aggregating it, identifying it and selling it to your competitors — and then selling it again to your competitors’ competitors. If you pull enough threads, the sweater begins to unravel. The latest thread to be pulled by the media is Dataium.
Dataium (DAY-tee-um) is a Nashville, Tenn.-based company that bills itself as “the world’s largest compiler of online automotive shopping behavior.”
They have been on my radar since December 2012, when The Wall Street Journal published an article called “How Dataium Watches You.” The article detailed how the company tracked the behavior of car shoppers on third-party sites such as Cars.com. Here’s the part that really caught my eye:
“The Wall Street Journal observed Dataium logging information about a visitors’ nearly every action — not just what pages were viewed, but also what parts of the page were clicked, which dropdown options were selected, and what information (such as name, email address, and phone number) were entered in dealer-contact forms.”
There’s a big difference between tracking the mouse clicks of anonymous users and compiling personal information. The State of New Jersey charged the company with doing the latter and profiting from it. Dataium admitted no wrongdoing but settled the case for a maximum payout of $400,000. I can’t really say whether this is a smoking gun or simply a case of a company’s intent and conduct being misunderstood. Either way, they’re in damage control mode in New Jersey and beyond.
Truthfully, I’ve been wondering when government agencies would begin to take a harder look at companies that use advanced technologies to track consumers on the web and, ultimately, build a complete profile on them. I won’t single out Dataium for that practice, and I realize those profiles may or may not contain personally identifiable information, but most lead provider and dealer websites ask for it. Was the consumer assuming confidentiality?
Did they expect to have tracking cookies inserted into their browsers? You can bet those questions will be asked and answered in countless ways before this issue is settled.
It’s About to Get Really, Really Interesting
They called me a crackpot. They painted me as the voice crying out in the wilderness. There was an organized campaign to discredit what I was saying. It’s amazing how recent history is bearing me out. Now, suddenly, I am once again a senior statesman and respected futurist. My credibility is strengthened and restored with each new revelation.
Several years ago, when I first rode through the streets in the middle of the night, sounding the alarm, there was a consortium of special interests conspiring to discredit the message. They sent their agents to the dealers to spread misinformation.
Now, I predict there is a wave of exposés and scandals about to hit our industry as more and more people take a serious look at what these vendors are, or are not, doing to our business. Your dealership and business is in danger. I am just proud to have been the catalyst that awakened the industry to what was happening when I first opened Pandora’s box several years ago.
Certainly there are good and honest vendors who are offering valuable services. We are not and never will paint them all with the same brush. In fact, there are many more good vendors than bad, and they offer useful services.
As for the rest, stay tuned.
Dealer’s Bill of Rights
It’s time for the NADA, or some other responsible authority to create a hard-hitting legal document. Let’s call it the “Dealer’s Bill of Rights.” It needs to be strongly worded enough to ensure legal ramifications if the signers violate it.
Meanwhile, you need to revisit all of your vendor-dealer agreements and get your attorneys involved to weed out the obscure, deeply buried clauses in your agreements that give your vendors ownership of your customers’ data. Perform a complete, detailed audit of your DMS and find out which vendors are pinching your data. Is that access necessary for the services they provide to you? What are they doing with your customer information?
Remember, you are legally responsible for your customers’ privacy.
Next, you need to monitor the activities of vendors using your inventory without your consent. You must limit who has authority to distribute your inventory to other websites and vendors you do not do business with. Then, you need to organically recapture the first page of Google results in your local area. Run the vendors off. They have stolen your turf and are exporting your customers.
Finally, you need to look at what you are paying outside vendors to do for your dealership that you should be doing internally. Failing that, look into local vendors with no ulterior motives or questionable alliances. At every stage, ask yourself this question: “Are these vendors contributing anything to my business and, if not, can I redirect those funds toward more profitable ventures?”
This article started and finished with the NADA Convention coming back to New Orleans in late January. Debbie and I hope to see you there. Obviously this article has severely restricted which parties we’ll be invited to (wink). So if you’d care to invite us to your event, you know where to find me.