On-the-Point

Giving Up The Ghost Pepper

February 4, 2015

Photo via IStockPhoto.com
Photo via IStockPhoto.com

I’ve been working on this article off and on most of the day, and rivers of sweat and tears are running down my face. No, it’s not from the hard work. It’s the hot sauce.

A few minutes ago, Debbie brought me a bowl of her wonderful, homemade-from-scratch chicken vegetable soup. You guessed it: I’m on a diet. New year, new Ziegler —again. Since this was going to be my lunch, I decided to spice it up a bit. What a great opportunity to try out that new hot pepper sauce I just bought!

Now, you’ve got to understand, I am a hot sauce aficionado. I’ve been collecting them for 30 years and I own hundreds of bottles of every description. I eat sauces and whole peppers that would put to shame any Vietnamese, Mexican, Korean, Indian or Jamaican brands you can find in your specialty foods aisle. My latest discovery is Dave’s Gourmet Ghost Pepper sauce, made with the naga jolokia pepper, which is rated at 855,000-plus Scoville heat units. For scale, Tabasco tops out at about 5,000 Scovilles. This is the kind of sauce you keep away from your eyes, pets and paint jobs. So I only used three or four drops.

Long story short, I think I’m dying. Thank goodness I already typed up the bulk of this article. If I don’t make it through the night, Deb can send it to the editor tomorrow. My only regret is that I won’t get to see the rest of 2015, because it’s going to be a huge year for those of you who are willing to work for it.

Like countless sales and F&I managers before them, Internet sales managers are destined for failure if they are promoted without the benefit of expert training. Photo via IStockPhoto.com
Like countless sales and F&I managers before them, Internet sales managers are destined for failure if they are promoted without the benefit of expert training. Photo via IStockPhoto.com

Are You Winning or Whining?

Most forecasters, including me, are predicting an exceptional year for new and pre-owned sales. So are you going into 2015 with your competitive spirit in full gear or bemoaning all the ways your competitiors are picking on you? Ours is a business of haves and have-nots. I have met with dealers who are enjoying record sales and soaring profits; I have also visited dealerships that are underperforming to an embarrassing degree.

Even in record years, there are winners and losers. If you are on the wrong side, take heart. The playing field is essentially level. No dealer can justify poor performance in this market. Time to quit making excuses and get tough. The only way to get your share of the business is to take it back from your competitors. Google is the battlefield, and if your website doesn’t convert, you are waving the white flag of surrender.

There are limitless opportunities to learn more about online marketing. Reading this magazine is a good start, but you and your senior managers have to take the next step and get some training. Last week, a dealer said to me, “I can’t have my people out of the dealership for three days of training. We’re having a bad month.” Of course, I’m thinking, Do you wonder why?

This is an old problem. Our industry is known for hiring, promoting and terminating until we get lucky. Most sales managers learned how to do their job from someone who got fired. I still meet F&I managers whose dealers promoted them to the most critical position in the dealership and then expected them to learn in the box. Only when they leave that first training session are they equipped with the plans, goals and skills they need to produce at a high level. 

Too many dealers are falling into the same trap with Internet sales. They don’t send their newly hired or promoted Internet sales managers to training, let alone attend themselves. Excuse me, but attending a 20 Group once every three months and listening to a vendor presentation before tee time doesn’t count. When was the last time you, your general manager or your general sales manager attended a comprehensive educational event on the modern retail car business? More likely, you sent a younger employee to training and failed to implement the ideas they brought back. “Sales are too slow to start experimenting,” your senior managers said, and you agreed. 

My challenge to the dealers reading this is to honestly ask yourself if your dealership is operating at or even near its potential. You can grow in 2015 or you can die, but you can’t stay where you are.

Johan de Nysschen is the president of General Motors’ Cadillac division. The author worries that de Nysschen’s plan to remake Cadillac as a premium luxury marque could leave loyal customers and some dealers behind. Photo courtesy of General Motors.
Johan de Nysschen is the president of General Motors’ Cadillac division. The author worries that de Nysschen’s plan to remake Cadillac as a premium luxury marque could leave loyal customers and some dealers behind. Photo courtesy of General Motors.

Cadillac Flirts With Disaster

Later this week, I will take the stage as keynote speaker at the annual meeting of the Massachusetts Automobile Dealers Association in Boston. My speech is titled “The Good, the Bad and the Ugly.” Truthfully, that’s one of three titles I use for what is basically the same speech. I talk about the latest news from each of the manufacturers and share my thoughts on their leadership, strategies and future plans. I also talk about rogue vendors and their deceptive practices and bogus statistics. Sometimes it’s brutal. I say things in these speeches that dealers might never be able to say themselves.

My readers and listeners know I wish the best for General Motors, its CEO, Mary Barra, and, of course, its dealer network. And they are doing well, but I worry they may have lost the ball in the sun. They are attempting to drive the Cadillac division upstream and I fear it may cost them some good dealers along the way.

To help their luxury marque compete alongside Audi, BMW and Mercedes-Benz, GM hired a new brand manager, Johan de Nysschen, whose 20-year career at Audi heralded the incredible success that brand enjoys today. Between Audi and Cadillac, he spent a couple years at Infiniti.

The problem, as I see it, is that he appears to be dead-set on reinventing Cadillac as a premium luxury brand. He has said they have to be willing to cast away some brand loyalists so they can attract a more desirable, higher-end luxury clientele. If I was a Cadillac dealer, I’d be furious. They’re going to throw away customers you’ve cultivated in your communities in the hopes of luring buyers away from the Germans? What if it doesn’t work?

Just last week, GM was forced to lower the price of the CTS by up to $3,000; year over year, many Cadillac models’ prices have increased by more than $10,000. Don’t worry about losing customers in the future, dealers. You may be losing them today. De Nysschen has made it clear he intends to hold the course on high prices and eliminate or dramatically reduce incentives.

Here’s a direct quote from de Nysschen about his strategy: “We cannot deny the fact that we are leaving behind our traditional customer base. It will take several years before a sufficiently large part of the audience who until now have been concentrating on the German brands will find us in their consideration set.”

That cracks me up every time I read it. He went on to say the plan will take about 10 to 15 years to come to fruition, at which point Cadillac will have overtaken the other top international luxury brands and achieved world domination. We’ll just assume the competition will sit on their hands and allow that to happen. Let’s further assume that Cadillac’s dealer network will enthusiastically go along with the plan and jump through whatever ridiculous facility-upgrade hoops GM puts in their path, and never mind the already-squeezed profit margins.

This strikes me as a real roll of the dice. If it doesn’t go de Nysschen’s way, he is going to give Lincoln a good shot at retaking the market.

The author fear a repeat of past attempts to rebadge vehicles produced by General Motors' Opel subsidiaryPhoto courtesy of General Motors.
The author fear a repeat of past attempts to rebadge vehicles produced by General Motors' Opel subsidiary. Photo courtesy of General Motors.

Nice Try, Opel

Meanwhile, at the Detroit auto show, the Buick division rolled out some spectacular concept product. The design was cutting-edge and futuristic. In my opinion, Buick has become a premium benchmark domestic brand, and it’s beginning to overshadow Cadillac. Who would have guessed that 20 years ago?

The shine wore off when I read that the Cascada, Buick’s new convertible, is officially headed for the North American market. I nearly spewed coffee out of my nose. Folks, that’s no Buick. It’s an Opel!

Every time GM has tried to rebadge an Opel, it has ended in disaster. Remember “the Caddy that zigs,” also (not widely) known as the Catera? … You know what, I just noticed how similar the names are. “Cascada” follows “Catera” follows “catastrophe.” When is GM going to learn that Opel is a millstone around their neck? I believe the cars are inferior and those whiny-ass German auto worker unions are unbearable.

I’ve said it before and I’ll say it again, in my best Ronald Reagan voice: “Mrs. Barra, tear down these plants.” Opel has no reason to exist and it would be a wise move to cease operations, take the one-time loss and move on. You shut down a profitable Oldsmobile, why not Opel?

The author believes the Ford Taurus suffers from a lack of the type of brand identity enjoyed by midsize competitors such as the Toyota Camry and Honda Accord.  Photo courtesy of Ford.
The author believes the Ford Taurus suffers from a lack of the type of brand identity enjoyed by midsize competitors such as the Toyota Camry and Honda Accord.  Photo courtesy of Ford.

Ford Suits Up

I first met Mark LaNeve back in 2004. At the time, he was poised to take over as president at GM. He had done a superb job resurrecting Cadillac with edgy, new, stealth-inspired product and high-energy commercials with Led Zeppelin music playing in the background.

We had a memorable first meeting. I already had a reasonably good relationship with John Smith and Pete Gerosa. (Why is it I always smile when I say or write Gerosa’s name? That’s another story.) I had just written something critical, but not awful, about LaNeve in a magazine article. So I got a call from Gerosa. “Hey, Ziegler,” he says, “you really blistered Mark in your latest article.” That’s right, I replied. It was his turn in the barrel. “Well, he wants to meet with you. We’ll fly down to Atlanta.” I told him I had to be in Chicago the next day. “Don’t worry,” he said. “We’re in the company plane and we’ll drop you off in Chicago.” I said that would be fine, as long as they didn’t drop me from 30,000 feet.

That meeting was the beginning of a long and great friendship that continued after the collapse of GM and the bankruptcy. When I needed a new Corvette, LaNeve had the engineers at GM do some extra things that made it really special.

I visited him at Renaissance Center several times, and he had the entire top management team meet with me on one occasion to listen to some new ideas. Mark and some of the others at that time were great leaders, but it was too late. There was no pulling the company back from the steep nosedive that the top management, led by Rick Wagoner, and the board were causing. It was never the troops in the trenches that sunk GM. The most impressive thing about LaNeve, to me, is that he’s a regular guy. You can talk to him and you know he’s listening.

Last week, I was elated at the announcement that LaNeve was going to join Ford Motor Co. as its new head of U.S. sales and marketing. All I can tell you Ford dealers is to fasten your chinstraps. This guy is a competitor, and when he shows up, he comes to play and win. That’s what I love about Ford right now. Although I don’t abuse it, I have the executives’ ear and they listen. Mark Fields, Jim Farley and LaNeve are tuned in, and it’s a much greater dealer-manufacturer relationship than most others enjoy.

Ford has taken some hits in segment market share recently that were predictable adjustments. Rolling out the new aluminum-body F-150 was expected to temporarily set them back. Honestly, the problems run deeper with brand identity across the lines. Friends though they may be, Fields and Farley were never immune to my poison pen. My readers know my criticism of Ford can be summed up thusly: great product, poor brand identity.

The Taurus, for example, is a tremendous car, but it isn’t high enough on the public’s radar to be more than a fleeting blip on the screen. It should be slugging it out with the Toyota Camry, Nissan Maxima, Hyundai Genesis and, of course, the Accord, especially while Honda is on the ropes. Just from my experience in the dealerships, with no statistical analysis, I would be willing to bet that if structured research were performed, we’d find that the public is less aware of Ford’s models than those produced by the competition. How many Americans could identify a Ford Edge in a lineup?

The Escape, Focus, Edge, Fiesta and Taurus are all great cars, but bland styling might be holding them back. To me, Jeep is a prime example of the adage that sheet metal moves units. Not even poor initial quality reports can slow the new Cherokee’s sales. They came up with a sharp design and loaded them up with lots of gadgetry.

I’d also go so far as to say that name-brand equity also sells. That’s why I am amazed the Taurus isn’t selling better. It’s a better car offering a better value than many of the competitors who are currently outselling it. I won’t even get into Lincoln products and the absolutely dreadful way they’ve frittered away brand equity with goofy alphanumeric nameplates. I write about this business on a daily basis and I have to stop and think before I can put the MKZ, MKT and MKX in order, but I have no trouble placing the Navigator. Leave the airport codes to the Europeans. American cars have names. 

Regardless, welcome home, Mark LaNeve. I am glad to see Ford is putting the band back together, and I am looking forward to visiting with Mark at the NADA convention, which will have concluded by the time you read this. Meanwhile, I just spotted a rather interesting infographic I just had to share: It measured spending on Google pay-per-click keywords among companies in the automotive sector in 2014. Cars.com was No. 1 with $21.3 million and AutoTrader came in at No. 2 with $20.4 million. Chevrolet sat at No. 5 after spending $15.5 million. So is who is laying down the big bucks to drive leads to your store?

Well, my heart is beating at a normal pace again and the tears have stopped flowing. Maybe I can handle Dave’s Ghost Pepper sauce after all. But I think I’ll stop at two drops tomorrow.

If I didn’t see you at NADA, look for my training schedule online or find me on YouTube, Facebook and Twitter. I look forward to meeting you and helping you make 2015 a year to remember. 

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