On-the-Point

The Time of Our Lives

January 14, 2015

Photo:istockphoto.com/cworthy
Photo:istockphoto.com/cworthy

My lovely wife, Debbie, and I just returned from a long-awaited, seven-day, Thanksgiving cruise through the Eastern Caribbean. We celebrated our 30th wedding anniversary aboard the world’s largest passenger ship, Royal Caribbean’s Allure of the Seas. It’s a floating hotel and casino with Las Vegas-quality food and entertainment. The shipboard activities were breathtaking. The indoor shopping mall and recreational areas were even better than the shore excursions.

There was always something to do, the staff was exceptional and the food was great. We visited Nassau, the Bahamas, St. Thomas and St. Maarten. It was fun, romantic and memorable — right up until the last two days. The ship was headed back home with no stops until Fort Lauderdale. That’s when it hit me.

At first I thought it might be latent seasickness, but it just kept getting worse. I visited the ship’s infirmary. I was running a fever so they gave me Tylenol and other assorted medications for the symptoms. Before I could leave, I had to fill out a 10-page questionnaire. They wanted to know everything I did on the ship from Day One — every place I went, with whom I interacted, what I ate and in which dining room.

They never said the word “norovirus,” but I’m no dummy. When we disembarked in Florida, a team of men in full hazmat suits stood waiting on the dock with cleaning equipment. I asked the guy with the clipboard whether our stateroom was on his list. He checked. “Yes,” he said, “and the one next door.”

Deb didn’t start to feel it until we were back home in Atlanta. It’s my turn to play nurse for three days while she recovers. So I doubt we’ll ever cruise again, but, you know what? It created some great memories I wouldn’t trade for the world. Besides, as we are so often reminded, life is short.

Passing of the Old Guard

The author remembers Ross Rewey as a widely respected executive and a worthy sparring partner. Photo courtesy of Ford.
The author remembers Ross Rewey as a widely respected executive and a worthy sparring partner. Photo courtesy of Ford.

I just read with great sadness of the passing of Bob Rewey. Throughout the ’90s and early 2000s, Rewey and I had what you might call a love/hate relationship. We met face-to-face on four occasions; sometimes to argue, sometimes to speak civilly. But it wasn’t personal. You see, at that time, Rewey was group vice president of North American operations and global sales, marketing and customer services for all six brands of Ford Motor Co. This was when Ford was experimenting with operating their own dealerships, the so-called Ford Auto Collections, in direct competition with their own dealers.

I didn’t like it, and I spent many hours writing, speaking and organizing against Ford’s plan and General Motors Retail Holdings, a similar initiative spearheaded by GM’s Ron Zarella. The goal was to ultimately bring them down by using competitive strategies the manufacturers didn’t have the expertise to counter. You might also remember that Jacques Nasser was in charge at Ford at the time. I remember him as the Jimmy Carter of manufacturer CEOs. He was the poster boy for narcissistic incompetence and certainly no friend to his dealer network.

But I held Bob Rewey with great respect and loved sparring with him on several levels — even when he wasn’t aware of it. A Ford dealer friend of mine once told me Rewey walked into a dealer council meeting, threw a magazine on the table and yelled, “Who’s giving this information to Jim Ziegler?” Months later, when the dust had settled, we met one-on-one at the NADA convention and actually had our most pleasant meeting. Even though we butted heads, I think he respected me, and I know I respected him. Sad to see him go.

While I was doing background research to be sure my insights were correct, I came across another obituary I had somehow missed. Ross Roberts passed away last January. Rewey and Roberts both played a huge role in my career. Roberts was more of a friend and I hate it that I missed that opportunity to write a proper statement when it happened. These guys are legends and they deserve to be remembered.

The author credits the late Ross robers with making pickups a priority for Ford Motor Co. Photo courtesy of Ford.
The author credits the late Ross robers with making pickups a priority for Ford Motor Co. Photo courtesy of Ford.

Roberts was the man who made trucks a front-burner priority for Ford. He is also generally credited with the campaigns, leadership and marketing that made the Taurus the No. 1-selling car in America for five straight years. He was there when I started my company in 1986, and my first major contracts were the Ford ESP video training series, private F&I seminars with Ford dealers and consulting with the heads of their minority dealers program.

When Jacques Nasser decided that Ford could compete with their own dealers by owning and operating their own stores, he put Roberts in charge of the project. I can assure you his heart wasn’t in it. He was a dealer’s guy. He understood car people. He played the good soldier in public. Privately, he said, “Jim, ‘One Price’ will never work in a competitive market.”

Last time I spoke to Ross was at the Indiana dealers’ convention. I delivered a keynote that was particularly critical of Ford policies and the Auto Collections. When I stepped outside the building, there he was. I was a little embarrassed because I had really unloaded on his employer. Roberts told me not apologize, saying he was sure I meant every word of it and he knew many dealers agreed with me.

You can’t buy that kind of class. I left for the airport and, like so many great relationships, ours drifted into the past.

The author believes the new GM Financial is on the path toward recapturing the affection GMAC earned among dealers. Photo courtesy of GM
The author believes the new GM Financial is on the path toward recapturing the affection GMAC earned among dealers. Photo courtesy of GM

It’s About Time

General Motors bled billions of dollars of fluid cash out of every artery in less than a decade under the apparently inept management of Rick Wagoner. According to Forbes, under Wagoner’s leadership, GM lost more than $80 billion dollars in his last four years as chairman and CEO, including a $30 billion cash reserve. He started shutting down the company one piece at a time, starting with Oldsmobile, then Pontiac, Hummer and, finally, Saturn — more on that stupid failed experiment in a moment. They then sold off General Motors Acceptance Corp. (GMAC) to raise cash when the well went dry.

Let’s face it, recession or no recession, Wagoner had the company headed for bankruptcy, swirling down the toilet and fighting the current. He also left a major domestic manufacturer without a captive finance company.

OK, my readers know I am not a huge fan of GM’s top management, but there are some bright spots. Mark Reuss, for example, may be the last real car guy in Renaissance Center. But the brightest light may belong to Mary Barra, who rose to the position of CEO last year only to run headlong into the biggest vehicle recall in the history of mankind.

If you are reserving judgment on Barra, ponder this: I think the good old boy network may have set her up to fail. Maybe they expected her to take the fall for the recall disasters they knew were coming because they couldn’t change the part numbers or conceal the underlying issue any longer. Opinions and conjecture aside, no one can dispute that Barra has displayed incredible tact and perceptiveness throughout a very difficult first year in office. She proved that not only is she up to the challenge, she is a superior leader to the two men who held her job before her.

Now, back in 2010, GM acquired AmeriCredit Corp. and rechristened the company as General Motors Financial Co. I wrote at the time this had the potential to become the fill GM’s captive void. It would be no easy task bringing AmeriCredit, formerly a dedicated subprime finance source, up to speed. Captives should have a robust leasing program and the ability to handle prime-credit customers, special finance and everything in between.

Well, GM’s Pinocchio is becoming a real boy. GM Financial offers leases, dealer lines of credit, real estate loans and floorplanning assistance. It is starting to look and feel like the reincarnation of the old GMAC that many of us knew and loved back in the day.

Good timing, too. General Motors has some excellent, competitive product and a great dealer network. Basically, I still love GM, and I will continue to compliment them when I feel they are doing the right thing. I predict that GM Financial will prove to be an incredible asset to the company and its dealers.

The successful launch of the new Jeep Cherokee and Ram 1500 EcoDiesel helped propel massive sales increases for Chrysler in the fourth quarter of 2014. Photo courtesy of Fiat Chrysler Automotive
The successful launch of the new Jeep Cherokee and Ram 1500 EcoDiesel helped propel massive sales increases for Chrysler in the fourth quarter of 2014. Photo courtesy of Fiat Chrysler Automotive

Homecoming Kings

Remember that girl in high school who won all the titles? You know, the homecoming queen, the head cheerleader, maybe even class president. We had one of those at our school. She was a sweetheart, but, honestly, I got sort of sick of hearing her name announced for every title and voted most popular for just about everything.

Well, Ram and Jeep are on a roll and the numbers continue to exceed expectations. With a 20% increase in November, Chrysler blew away the competition statistically while GM registered a relatively limp 6% increase. As for Ford, well, retooling their plants to build the new all-aluminum truck lineup contributed to a totally flaccid 3% loss.

Even so, as of this writing, the combined month-over-month increases jacked the seasonally adjusted annual rate (SAAR) up to 17.2 million units. That will be the highest number since 2006 if the trend holds through December.

With Ram up 31%, the brand just continues to be on fire, and Jeeps are still flying off the lots, earning a 27% increase for that marque. It’s never been this good to be a Chrysler dealer, at least not since the ’60s. The imports remained steady as well, registering mostly modest increases while Ram and Jeep separated themselves from the field.

Do You Recall?

Sitting here in my home office. I’m looking at two recall notices on my Buick. That’s right, I drive a Buick. After seven Corvettes and nine Escalades, after my last knee surgery, I decided I needed something that’s a little easier to get in and out of. It’s a fine vehicle, but like so many Americans, I am getting worn out by all these recalls.

I just took it into Jim Ellis Buick three weeks ago. I had to call and ask if it was the same issue they fixed then. “Oh, no, Mr. Ziegler,” came the reply. “This is a new recall. But the good news is, we sent the same notice twice. It’s only one repair.”

Of course, the issue is the 20-mile trip to the dealership, not the number of repairs, so what do I care? I am in the business, so I have a lot more patience about these things than the average consumer. We must be wearing the public out. And what’s this? I just read that GM is recalling another 316,000 vehicles because the headlights might go dark without warning. It’s only for older models, but my first reaction was to hope it affected my car so I could get all my repairs done at once. … Not!

The Takata airbag recall, however, affects you, me or someone we know. Check out my December column for more details. The short version is, Takata is the noun and “cluster” is the adjective. And I’m telling you, there is some kind of political chicanery going on at the National Highway Traffic Safety Administration. First, NHTSA officials said they would expand the recall beyond the hot, humid regions in which the airbags have spontaneously deployed. They then reversed themselves days later.

I smell a government rat here.

Excuse me, but could it possibly be that someone said, “Hey, look, there is no way Takata could possibly produce that many replacement parts. They can’t even produce enough to cover the current recalls. If we increase the scope, it will be pandemonium. Let’s back off for now.”

If any such conversation has taken place, your tax dollars are funding an agency that is demonstrating more sympathy for Takata than any company could possibly deserve. I want to know how long they and their OEM clients have known those bags had issues. I bet it goes back years.

The latest problem is that Takata might be repairing the recalled airbags with “like parts.” That means they are taking out the defective parts and installing … new defective parts? Meanwhile, a car sitting still in a junkyard in Japan blew up in a terrible explosion. It wasn’t one on the recall list, but it is now. Now junkyard workers are scared to even touch those units, and I don’t blame them.

If you want to check on any car you’re selling or trading for open recalls, the National Highway Traffic Safety Administration’s (NHTSA) has set up a website: SaferCar.gov. Just enter each VIN number and it will list any and all recalls since 1999, regardless of the manufacturer. If this website works better than Obamacare.gov, it might actually be helpful.

Scion Fiction

Did you ever wonder why your OEMs continue to hang onto a stupid idea, sometimes for years after the consumers have rejected it? How many times has a manufacturer continued to build a model that isn’t selling and ain’t ever gonna sell?

Remember the Pontiac Aztek, perhaps the worst abomination in automotive design history? They built it, couldn’t give it away and kept the assembly line rolling long after they should have cut their losses. If it weren’t for Walter White, the ugly, misspelled Aztek would already have disappeared into history forever.

How about the Honda Elephant, I mean, Element, or the Ridgeline, that poor excuse for a pickup truck? Heck, what about Saturn? That division cost GM $3 billion to create and lost more than $1 billion a year until they shut it down. They chased that failed concept so long that they discontinued the profitable Oldsmobile lineup to hang onto it a couple model years longer. The Ford Flex, the Lincoln MKT … What in the hell are they thinking?

Now, here’s the granddaddy of all manufacturer mistakes. I wrote about it in the beginning and predicted exactly the way it turned out. In spite of glaring truths, the manufacturer is clinging to a fantasy. I speak, of course, of Toyota’s Scion brand.

Scion is doomed to remain the dismal failure it always has been and always will be. There was never a need to create this mistake, and even less reason to hang onto it. But this week, Toyota recommitted to Scion and predicted huge sales to America’s youth. Of course this is about the dozenth time they made that same announcement. Folks, it ain’t gonna happen.

Remember the headlines in 2002? “Toyota Targets Youth With New Brand.” Really? What is a “youth” car, anyway? And the industry publications fell right into step. Every article I read that mentioned Scion referred to it as “Toyota’s youth brand.” At the time, I predicted the marque would appeal to two groups: senior citizens and Baby Boomers on a budget. Seniors loved the boxy xB wagon because it was easy to get in and out of. (I can relate.) Boomers loved the affordable xA hatchback and xC coupe. As for the youth of America, well, I never saw one behind the wheel. Oh, and of course Toyota one-priced them with no gross to be sure salespeople didn’t want anything to do with them. Ah, factory wisdom. 

Even the Kia Hamsters couldn’t shake the majority of their sales coming from Baby Boomers and late Gen Xers. It’s laughable how many of these manufacturers hang onto failed marketing schemes targeted toward the elusive Millenial car-buying crowd. The problem is, it’s not elusive. It doesn’t exist.

About half of all new-car sales are to buyers age 55 and up. Millenials are responsible for about 12%. What form of insanity has infected our manufacturers? Why are they wasting so many of their advertising resources on the least motivated generation in history? Admit who your real buyers are and market to them accurately. The 30-year-olds living in their parents’ basements are busy playing Xbox and saving up for their next piercing. In other words, they’re not buying it, and neither should the rest of us.

Well that wraps it for another article. I’d better check on the wife. Until next time, keep those emails and messages and phone calls coming. See you on Twitter and Facebook.

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