On-the-Point

Elvis Is Dead and I Don’t Feel So Good Myself

The Alpha Dawg has a bad feeling about globalization, inflated sales reports and the move toward a fully online sales process.

October 7, 2015

If you have never read “Elvis Is Dead and I Don’t Feel So Good Myself,” do yourself a favor. It’s an incredible book by the late Southern humorist, Lewis Grizzard. You couldn’t live in Atlanta for the last 30 years and not be aware of our hometown boy and the wisdom of his writing.

On its surface, the book is about the author’s early life in the 1950s and ’60s, a much simpler and perhaps safer time. Behind the humor lies Grizzard’s reflections on coping with deteriorating societal values. Written in 1984, shortly before he passed away, it remains one of my favorite books. Much of the style and wordsmithing I attempt to put into my writings was certainly influenced by Grizzard’s conversational way of telling his stories.

I don’t know about you, but I’m starting to get that uneasy feeling that all hell is about to break loose again. I’ve never been habitually negative, but I do consider myself a realist. After weighing all the facts, news and current events and using history as my guide, I think we might be in for a rough time in the near future.

Made in China

A late-summer collapse at the Shanghai Stock Exchange preceded a major downtick stateside, cementing the author’s fears that the U.S. is too heavily invested in China’s volatile government. 
A late-summer collapse at the Shanghai Stock Exchange preceded a major downtick stateside, cementing the author’s fears that the U.S. is too heavily invested in China’s volatile government. 

You cannot deny that I have been on top of the China issue for more than a decade now. In case you haven’t heard, I don’t trust China, I won’t bank on China and I won’t invest in China. I said it back in 2002, when Malcolm Bricklin was running around trying to get dealers to invest in Chery, and I’ll say it again today: No Chinese car will come ashore in North America.

I realize they have bought some existing manufacturers. I know other OEMs, including domestic manufacturers, have partnered up with the Chinese to use their cheap labor. But no Chinese company has produced an original product that meets U.S. standards for safety or craftsmanship. Remember Russia’s five-mile-an-hour crash tests? Those poor dummies had to be reassembled at the molecular level.

Even when the supposed experts in the automotive media and factory headquarters said I was the lone voice of opposition, I never wavered. China is not the new frontier. It is a beautiful country full of good people lorded over by a corrupt communist government. And that government refuses to prevent the countless, devious counterfeiters who make a dishonest living by stealing every design and technological solution their business partners dare to share with them — and I’m not just talking about blue jeans, golf bags and wristwatches.

I’ve also pointed out that China has the largest standing army in the world, perhaps in history. Some reports say they are nearing three million troops in uniform, not to mention a fleet of nuclear submarines and advanced weaponry. That’s a massive mobilization for a nation with no real enemies or particular threats. Did you hear they had five warships conducting exercises off the Alaskan coast during President Obama’s visit to the Arctic Circle? I get the show of force but I fail to grasp the meaning. What exactly are they up to?

We know they’re hacking our computers and stealing our secrets and technology. I’m not just talking about inept corrupt government officials with their own server banks in the garage. Our own secretary of state, John Kerry, claimed the Chinese were hacking his computer. That government is not and never was our friend.

For those of you who are rolling your eyes and thinking, “There goes Chicken Little again,” remember that the sky actually did fall in August. The stock market in Beijing hit the skids and the U.S. stock market soon followed. We are invested in and indebted to a market that could tank — hard — if it doesn’t get its act together.

U.S. auto sales fell back for the first time in two years in August. Is it an omen of things to come? It has always been my belief that car sales react to the mood of the country more than the actual economy. I think the public is spooked right now with by all the public violence and economic uncertainty. Negative news kills sales. The experts are still predicting sales of 17.8 million units for 2015, which is incredible. I genuinely hope that sustains.

Pants on Fire

Ziegler believes a potential lawsuit between a Maserati dealer, the OEM and its parent company, Fiat Chrysler, could expose the widespread practice of falsifying sales reports. 
Ziegler believes a potential lawsuit between a Maserati dealer, the OEM and its parent company, Fiat Chrysler, could expose the widespread practice of falsifying sales reports. 

You’ve got to remember that I’m passionate about all the Superman subjects — you know, “Truth, justice and the American way.” I jump out of my recliner and cheer every time Rocky beats Ivan Drago. I believe in right and wrong as well as honor and principles. I refuse to sell out. A vendor once told me, “We considered buying you off but we knew it couldn’t be done.” It was one of my proudest moments.

So whenever I see a person taking a stand for what they believe is the right thing to do, I take notice. In September, I read about Stuart Hayim, the owner of Recovery Racing and Maserati dealerships in New York, New Jersey and Florida. He is suing the manufacturer, claiming they unfairly penalized his company because he refused to falsely report sales.

I don’t know if he’s telling the truth and I know better than to guess in print. But I will say that many manufacturers are trembling about the possible outcomes of this case. The exaggerated sales are about to hit the legal fan, and they know they’re all guilty as hell.

I have written about this scenario before: It’s the last three days of the month and the dealer or general sales manager’s phone starts ringing. It’s their manufacturer representative, telling them they need to punch some units as “sold.” The dealer is forced to use one of a number of accounting tricks to falsify their numbers.

BMW and Mercedes-Benz dealers have been telling me this story for years, but from what I’ve heard, the problem started with cigar-smoking Cadillac executives miscounting sales back in the ’90s and probably beyond. I remember Toyota dealers in some markets back in the ’80s selling cars to their own internal leasing company at the end of the month to falsify sales reports.

So does Hayim have a justifiable complaint? I can’t say, but I do know he’s hired Len Bellavia, my friend and attorney, whom I consider to be the best car dealer litigation attorney in the world. Did Maserati, which is owned by Fiat Chrysler Automobiles, put pressure on Hayim’s dealerships to give the parent company a boost just before FCA was to start trading publicly, then try to penalize him and his company financially because he was honest? If so, watch out, Sergio! Lenny is on the case.

It’s about to get really interesting with Lexus now beating BMW for the last several months in U.S. sales and maybe overtaking them for the year. Right now there are only 1,100 units separating BMW and Lexus for the year, and Mercedes-Benz is right on their tail. Traditionally, the Germans have been in a blood feud to beat each other every year, and now the Japanese have checked in and Audi is playing spoiler. It’s a possibility that BMW will have to resort to actually selling all the cars they report. That could be a game-changer.

Stay tuned, folks. And if you see me smiling, you’ll know it’s because some of the pious, self-righteous OEM executive types who lectured dealers on ethics and honesty are getting a taste of their own medicine.

One Online, Above-Invoice Price

They just can’t help themselves. Every time manufacturers start to interfere with retail, they always screw it up. Now we have Lexus announcing they are going to experiment with no-haggle pricing. We’ve all seen it coming. Ford tried it. GM tried it. Toyota tried it. It did not and will not work. Still mired in the failed Scion experiment, Toyota is getting back into the pricing game with its near-luxury marque. Is this déjà vu or what?

Lexus is on a roll, and with so much going for the brand, it baffles me why they think they need to do this. Is this some kind of knee-jerk reaction to Tesla? In my experience, it’s consumers who drive negotiation, not the dealers. To be a successful one-price, no-haggle dealer, you have to drop your drawers and brace yourself.

What I do see here — and correct me if I’m wrong — is a poison pill the factory is throwing out to stop the downward pricing spiral caused by the lead providers creating a race to the bottom. Lexus and Toyota have both made several moves recently that indicate to me they are concerned with lead providers (and thinly disguised online brokers posing as lead providers) taking over the industry.

Toyota is now going for total online sales. Is this a reaction to Carvana or something bigger? We’ve had the ability to complete transactions online for a long time, but is that what consumers really want? There are people, companies and other entities that have a hidden agenda to promote this trend. They are pushing the concept at the public and engineering bogus research that says it’s consumer-driven.

I don’t buy it. Yes, there is a certain percentage of people who will buy their cars online having never seen it or touched it or driven it. I think that’s a minimal percentage and certainly not mainstream.

Toyota simultaneously announced a ban on dealers advertising below invoice. I spoke with a dozen Toyota dealer friends and the feelings are all over the board. Some are cheering and others are gnashing their teeth in anger.

The feeling is that it will prevent some dealers from offering rock-bottom prices that cheapen the product’s perceived value. Others say they need the option to go low to move inventory and earn incoming units and incentives.

Regardless, I think Toyota has stepped way over the line getting involved in retail. They want to sell cars direct to the public with a total online transaction. Good luck! I predicted GM’s “Shop-Click-Drive” program would be a total bust, and nothing I’ve heard has changed my mind.

So why would any manufacturer force dealers to spend millions of dollars to turn their stores into the Taj Mahal only to turn around and promote a fully online sales process? It’s almost as if they’re making it up as they go along.

Another One Bites the Dust

Ladies and gentlemen, Elvis has left the building. … Well, not exactly Elvis, but Bob Pradzinski, the No. 2 sales executive at Hyundai Motor America, flew the coop on or about Sept. 1. That pissed me off because I had November in the office pool. Hyundai and Kia are so predictable for unexpected top executive departures. They’ve burned through a lot of really great executives in a short time.

In the words of the late TV pitchman, Billy Mays, “But wait! There’s more!” Pradzinski is being replaced as U.S. sales director by Derrick Hatami. What’s weird about that is that Hatami left Hyundai in January to be U.S. sales chief at Nissan. Now he’s back.

I think maybe the Koreans were having a few drinks at world headquarters in Seoul and somebody said, “Wouldn’t it be funny to bring Hatami back and then do it all over again in a year or two? Maybe even bring Pradzinski back to replace Hatami?” I can picture them all laughing hysterically at the idea. I wish I was there! That reminds me, I’d better check the pool. I think I have Hyundai CEO Dave Zuchowski for January.

Meanwhile, at FCA headquarters, Sergio Marchionne keeps getting Mary Barra’s voicemail. As I’ve written previously, I’m convinced Sergio is trying to engineer a hostile takeover of General Motors. The GM brass have totally rejected his advances and, as I predicted, it’s about to get nasty. Sergio is talking economies of scale and the elimination of redundancy, which actually makes a lot of sense. Of course the executives at GM have a vested interest in protecting their own individual interests because any merger or takeover would certainly eliminate some redundant positions at the top.

I really like Mary Barra and I think she’s competent but I also think she inherited some dead weight at the top who are punching way above their weight class.

Cashing in on Historical Brand Equity

The recently revealed Lincoln Continental concept car is a signal that Ford has abandoned its alphanumeric model-naming strategy for its highline brand. 
The recently revealed Lincoln Continental concept car is a signal that Ford has abandoned its alphanumeric model-naming strategy for its highline brand. 

I take credit for being the catalyst for several things in the industry. One of the things I am dead certain was my inspiration was the revival of the Corvette Stingray name. I spent 15 years lobbying several presidents of GM to bring that name back. And I believe it was my prodding that caused the Germans at FCA to bring back the retro-Dodge Challenger. I am sure others have taken that credit but I assure you I started both of those things in motion.

I couldn’t be more proud to see Ford coming out of their coma and starting to put real names back on their cars again. MKX, MKZ, MKC, MKT … those names have no imagination, and frankly, the public doesn’t identify with them. I have repeatedly said and written that American cars have names. Stop trying to be Germans with the alphanumeric names already. If I had my way, we’d still be rating engines in cubic inches. Everybody knew what they were getting from a 426 Hemi, 427 Corvette or 428 Cobra Jet Mustang.

Well, Ford is reviving the Continental name and putting it on one hell of a nice car. I think Lincoln will see a revival if they stay the course. Somebody in engineering evidently removed their head from a moist, dark place and said, “Aha!” Lincoln might want to look back in their playbook to the times when they built designer cars. At various times, I owned a Bill Blass Town Car and a Cartier Edition.

By the way, the Ford Ranger revival is long overdue. There is a strong market for that little truck, as the Chevrolet Colorado has proven. Somebody released some pictures of a new Ford Bronco prototype. I hope they actually build it.

We’re hearing that Jeep Grand Wagoneer and Barracuda are looking at a revival. Great ideas both. When I was lobbying Daimler to bring back the pony car I originally told them they needed to revive the Hemi ’Cuda. At the time Chrysler was reintroducing the Hemi engine and promoting it endlessly. I was informed that Plymouth was discontinued and they didn’t “do retros.” That’s when I reminded them there was a Dodge version called the Challenger.

I am still high on the name Buick Wildcat, which is still in the vault. And I think Ford missed an opportunity a few years back when Clint Eastwood made “Gran Torino.” Oh well!

The Trump Card

Like him or love him, hate him or loathe him, you’ve got to admit that Donald Trump has forever changed the political landscape. I find him entertaining. He is the antidote to the torturous election cycle. The old political hacks don’t know how to deal with him. He says he can’t be bought and points out that his opponents can be and have been. I can’t wait for the next debate. I’ll have my popcorn ready.

It was no surprise when he got sideways with Mark Fields at Ford. Candidate Trump is threatening to put a 35% tariff on cars built in Mexico or China. The exchange between the two was interesting and I predict we haven’t seen or heard the last of it. One thing Trump is great at is baiting people for publicity, and Fields’ reaction was right at the top of his menu selections.

Will Donald be the next president? I honestly don’t think so. But I do think he’ll make the candidates more responsive to what he calls the “silent majority,” a term we haven’t heard since the Reagan years.

Well, it’s been another incredible month in another incredible year. I’m just back from a westward swing through San Diego, where I spoke at the Dealer Socket User Summit, and Industry Summit in Las Vegas, where I presented a two-day Profit Masters workshop and accepted my second consecutive Diamond-level Dealers’ Choice Award for sales training. Thanks to everyone who voted for me, but please stop asking when I plan to retire. I want to die on stage in front of a cheering audience.

Until next time, find me on Facebook, YouTube, LinkedIn, Twitter and Periscope!  

Comments

  1. 1. Lauren Wichman [ October 08, 2015 @ 03:51PM ]

    Very insightful n well thought out article. I hope for the best but your declarations are probably correct. Better pray more or move.:)

  2. 2. Brenda Kilgour [ December 30, 2015 @ 12:24PM ]

    Love you up here in Canada and as a recovering auto marketer. What's your over-under on the FCA implosion? I hear Fiat dealerships are closing left and right, and they remain at the bottom of the heap qualitywise. How much longer can the Fumée e Specchi continue?

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