On-the-Point

We’re Selling Cars Like Candy Bars

Sales are off the charts and the Alpha Dawg is on the road. Learn why Donald Trump is targeting Ford, how the Scion experiment failed and why even third-party lead providers deserve a second chance at love.

April 18, 2016

Photo: Bodo
Photo: Bodo

Party on, Garth! Light-vehicle sales showed a year-over-year increase of 8% in February. Of course, that’s coming off of a January in which winter storms ground sales to a halt. Still, statisticians, industry experts and analysts are predicting the possibility of a recordbreaking 18.9 million-unit sales year.

Of course, that’s assuming nothing goes wrong with the economy, the delicate balance of diplomacy in China, North Korea and the Middle East, the presidential election or any of a thousand other variables that could slam the brakes on momentum without a moment’s notice. But until something happens, we’re selling cars like candy bars. Party on, Wayne!

Personally, I have never been so busy and so optimistic in life and business. In a few days, Debbie and I will be flying to Houston for the 19th Internet Battle Plan Conference. After that, I’ll be in three dealerships in two weeks, training and consulting from Tallahassee to Staten Island to Lake Charles. Then I’ll switch suitcases and fly back out to the National Automobile Dealers Association (NADA) convention in Vegas and then, a couple dealership visits later, I’ll be at Dealer Summit in sunny Tampa in May. You don’t even want to see my calendar. I’m booked clear to November.

Reaching the Summit

I am really looking forward to Dealer Summit this year. If you are not signed up already, you’re missing out on a spectacular event. This show was designed specifically for dealers and dealership management, it’s produced by Auto Dealer Today and F&I and Showroom magazines and it is one of the premier events in our industry. The fact that we will be in Tampa in springtime is just the icing on the cake.

I’ll be presenting my one-day “Profit Masters” seminar on Tuesday, May 3. We will be talking about high profitability and best practices in sales, sales management, F&I and digital marketing. I’m proud to say I have trained countless Profit Masters over the last several years, and I hope you will join us.

The next day, I will deliver the opening keynote on my views of the state of the industry, now and in the future, as I see it. I’ll be talking about fake trends, falsified statistics, secret agendas and manufacturer and vendor treachery, as well as the positive trends and developments and some best practices to adopt going forward. I’ll be talking about current events, government interference, the good guys and bad guys, naming names and taking numbers. This is going to be classic, no-holds-barred, over-the-top Ziegler. I promise to be irreverent and sarcastic, humorous, obnoxious and insightful.

A worker mans a machine at Ford Motor Co.’s Cleveland Engine Plant. The OEM’s plans to open another factory in Mexico have drawn the ire of Republican presidential candidate Donald Trump. Photo courtesy Ford Motor Co.
A worker mans a machine at Ford Motor Co.’s Cleveland Engine Plant. The OEM’s plans to open another factory in Mexico have drawn the ire of Republican presidential candidate Donald Trump. Photo courtesy Ford Motor Co.

Trump to the Detroit Three: You’re Fired

More than once, real estate mogul and disruptive presidential candidate Donald Trump has said something that had me snorting and chuckling and even spewing coffee out of my nose, tears streaming down my face, as I watched the interviews and debates and enjoyed his antics.

Then, all of a sudden, it got serious. This guy might go all the way to the White House. Trump is more than a class clown distracting and interrupting the smarter kids. He is making points that resonate with a lot more people than anyone ever imagined, particularly with his three-pronged campaign promise to stop illegal immigration, bring U.S. jobs back home and “make America great again.”

It’s that second prong that led to Trump and Mark Fields, the president and CEO of Ford Motor Co., sparring in the media. Trump pointed to Ford’s plans to build another billion-dollar manufacturing facility in Mexico, and he threatened to impose high import taxes on Ford or any other U.S. company caught exporting American jobs to foreign counties.

Personally, I love Ford. I’m a Ford driver and I consider myself a friend of the OEM’s top management team. But I have to agree with Trump on this one. Of course, I can’t say I always agree with his rhetoric or believe he knows how to fulfill his lofty campaign promises, but I like the way he’s thinking.

If Trump is pissed off at Ford for their Mexican plants, then he’s going to go crazy over the new Buick Envision debuting this year. General Motors plans to build it in a plant in Yantai, China.

You heard me! The Buick SUV of the future will be built in China. Wait until that gets on President Trump’s radar screen! The folks at GM are trying everything possible to put a spin on this model to sell the public and the politicians that this car isn’t Chinese at all. The official press on the Envision is that it was designed, engineered and tested in Michigan.

The problems remain that Chinese manufacturing is not and has never been about reliable, high-quality goods and services. No matter what GM tries to sell us, I predict we’ll soon have another Opel on our hands. I predict the Buick Envision will be saddled with erratic quality issues and problems. One day, it’s great; the next day, maybe not so much.

Don’t forget that GM has been trying to dress up Opel products and introduce them as U.S. models for decades. But they could never put enough lipstick on that pig to make it work. Every Opel model they rebadged as an American car failed and was discontinued. Now they’re going to find themselves back in the same old hamster wheel, trying to make Chinese-built cars live up to the quality we have come to expect from a Buick product.

The author believes that dealers who maintain separate Internet and showroom sales departments are sowing seeds of discord among staff members and missing sales opportunities. IStockphoto.com/Patrick Heagney
The author believes that dealers who maintain separate Internet and showroom sales departments are sowing seeds of discord among staff members and missing sales opportunities. IStockphoto.com/Patrick Heagney

Either You Get It or You Don’t

Bob Dylan once said, “There’s a battle outside, and it’s ragin’. It’ll soon shake your windows and rattle your walls, for the times they are a-changin’.”

For 25 years now, I’ve traveled up to 250 days a year, consulting, speaking and working in dealerships. I have consulted with dealers representing every brand, in all types of communities, in virtually every state. I’ve worked deals and interacted with sales departments and customers.

Over the course of my career, I’ve had to reinvent myself, learn new processes and adapt to new paradigm shifts. Nothing is more puzzling to me than the fact that, when it comes to Internet sales and marketing, there are only two types of dealerships: the “get-its” and the “don’t-get-its.”

Internet sales have been part of dealership sales and marketing for nearly 20 years now. The battle ragin’ today is between old-school and new-school dealers. You old-schoolers seem determined to divide your sales staffs into competing Internet/BDC and showroom departments. I can’t understand it. My biggest challenge as a consultant and trainer is taking down those barriers.

The days when a simple text auto-responder was all we needed have long passed. The “get-its” are hiring professional, Internet-savvy workers and using state-of-the-art CRM systems. More importantly, they are removing the roadblocks created by the mutineers and resisters in sales and management who keep sabotaging the process. If your dealership is going to prosper and crush the competition, you’re going to have to make a hard decision or two.

There are people in your store who are working against the Internet department because they don’t get it, they are jealous of it, they don’t want to change and learn new things and they are happy with what they always used to do. They hope this Internet thing is a fad that will go away soon. They’re kidding themselves. Don’t let yourself fall into the same trap.

When Toyota North America CEO Jim Lentz announced the end of Scion, he described the OEM’s “youth” brand as a laboratory for new ideas. The author believes the Scion experiment was doomed to fail. Photo courtesy Toyota Motor Sales USA
When Toyota North America CEO Jim Lentz announced the end of Scion, he described the OEM’s “youth” brand as a laboratory for new ideas. The author believes the Scion experiment was doomed to fail. Photo courtesy Toyota Motor Sales USA

Toyota in Wonderland

I just can’t help myself. I laugh out loud at the absurdity of the positive spin some manufacturers try to put on their moments of monumental stupidity. … What’s that? Why, yes, I am talking about Scion. How did you know?

I’m sure you have heard that Toyota discontinued the Scion brand and they’re rolling some of those models into the parent company’s lineup. Nothing wrong with that. They’re doing the right thing — about 10 years too late, but they’re doing the right thing. Scion was a bad idea from Day One, a flawed premise based on a flawed interpretation of bogus research.

I came out with numerous articles and speeches throughout the years criticizing the “youth” brand that only caught on with families and senior citizens. As the term became fashionable, Scion was more often described as a “Millennial” brand. It was sold with a supposedly customer-friendly process and an endless supply of marketing buzzwords. Toyota execs kept raving about the success of the brand and made dealers invest in it, train on it and prop up the façade. It was Saturn all over again.

I had a lot of fun at Scion’s expense, but it was sad watching such a magnificent company and great dealer network get lost in their own delusion. Toyota should have put this dog to sleep a decade ago, when it first became evident it was a failure. Of course, by that time, they had a substantial investment and didn’t want to lose face.

What’s even more ridiculous is the spin they’re putting on the shutdown. One article I read started out with the words, “Toyota’s Scion experiment has ended.” Excuse me, but it stopped being an “experiment” 10 years ago. And yet all the articles I’ve read have said something about how Scion was created as a sort of laboratory to explore new products and processes that would attract the car buyers of the future.

No surprise, I guess, considering Jim Lentz, CEO of Toyota North America, was quoted as saying, “This isn’t a step backward for Scion; it’s a leap forward for Toyota. Scion has allowed us to fast-track ideas that would have been challenging to test through the Toyota network. I was there when we established Scion and our goal was to make Toyota and our dealers stronger by learning how to better attract and engage young customers. I’m very proud because that’s exactly what we have accomplished.”

That’s one way to put it. I would have said, “Hey, we poured millions of dollars into a goofy-ass, criminally misconceived project and it crashed and burned. Sorry!”

The project was a flop and the only thing Toyota learned was not to do that again. (At least I hope so.) Saying it was a success seems to be a way to justify the injection of Scion Pure Pricing and Pure Process Plus online car-buying processes into your Toyota dealerships.

In Toyota’s press release, they claimed that more than a million Scions have been sold since 2003. I had to raise an eyebrow when I saw the stats they quoted. Toyota claims that 70% of Scions were bought by people who had never owned a Toyota before.

I suppose I can swallow that stat, but here’s where I’m choking just a little: Toyota claims that 50% of Scion Buyers were under 35 years old. What’s that old rhyme about pants on fire? I always said Scion would become a youth brand if they could keep all those old people from buying them. Seems to me I saw some other research by reputable non-Toyota sources several times throughout the years that said there was a disproportionate number of seniors buying Scions. The truth, like the brand, may be lost to history.

Welcome to the Third Party

Ziegler says third-party lead providers who knowingly perpetuate the stereotype of the unscrupulous car salesman are doing dealers – and car buyers – a disservice. IStockphoto.com/SumnersGraphicsInc
Ziegler says third-party lead providers who knowingly perpetuate the stereotype of the unscrupulous car salesman are doing dealers – and car buyers – a disservice. IStockphoto.com/SumnersGraphicsInc

It’s no big secret that I was instrumental in educating dealers and the industry a few years back as to the evils of the then-emerging TrueCar and its then-CEO, Scott Painter, who I characterized more than once as the Great Satan of our industry. My campaign to educate the industry actually made me the target of an FTC investigation. They tried to claim I organized a boycott, which was totally untrue.

As a result of the movement that sprang up from my sounding the alarms, TrueCar nearly went under, and its leadership team had to totally revamp their business model. They knew they needed to have a balance between dealer-friendly and customer-friendly. Scott Painter publicly repented and admitted he’d gone too far, but he couldn’t help himself. Soon the company was drifting back to its old ways and Painter was making comments in speeches and interviews again that I considered anti-dealer. And then, boom! Painter was out and John Krafcik was in. And then John Krafcik was out and, lo and behold, Chip Perry is at the helm of a ship that appears to be taking on a lot of water.

I’ve known Chip Perry for many years. He hired me as a consultant to teach his sales team how to sell to car dealers. If anyone can put TrueCar on track and make it dealer-friendly, it’s Chip. This guy is the dealers’ ambassador and he knows what he’s doing. I plan to keep an open mind.

I have also written and said bad things about Edmunds.com. My main complaint is that they have made a habit of posting anti-dealer articles on their websites for consumers to read, and they have made a business model out of bashing dealers. It started with an article some years back titled “Confessions of a Car Salesman,” where a reporter allegedly went underground and worked at a dealership, where he conveniently found every possible negative stereotype doing every illegal and unethical thing you can imagine, all in one place.

Edmunds relished in painting the picture of car people as unkempt, green-toothed, alcoholic con artists who used listening devices to spy on conversations between customers and cheated everyone they could. Whenever you put the words “car salesman” into Google, this article still comes up at the top of the search.

Then they started writing other “confessions” from service technicians and F&I managers, all designed to foster distrust of car dealers. When a new Edmunds executive reached out to me, I blew him off like a bad habit. I told him to take down those offensive articles and we’d have a conversation.

At long last, things appear to have changed. I have started to hear good things about the results some of my dealers are getting with Edmunds’ referral programs. One of my dealer clients and great friends, Matt Lasco, says they are doing a great job for him, and I respect his opinion.

More recently, I was on a broadcast on Auto Dealer Live with Rae Selvey, executive director of dealer business for Edmunds. No matter how much I don’t like someone’s company, I never take it out on the individual. Good thing, too, because I ended up having a pleasant conversation with her after the broadcast. She was friendly and, surprisingly (to me), she was car-savvy. She pointed out that the negative articles had been rewritten and modernized, made more dealer-friendly. I smiled, thanked her and said, “Not enough.”

Then she invited me to the Edmunds reception party at NADA. Like I said, I’m starting to hear good things about their results and I want to be a little more open-minded. So Debbie and I will be there, but we will be accompanied by a professional food taster, just in case. If my blogs are still active by the time you read this, you’ll know it turned out OK.

Another and perhaps more frequent target of mine has been CarGurus. I have thrown a slew of negative comments at their business models and the occasional insult to the executive team’s ancestors. I even told Langley Steinert, CEO of CarGurus, that I pictured him sitting at his desk with fire and brimstone shooting out of the walls as he propped his cloven hooves up on his desk. In all seriousness, my grievance with CarGurus was they have always rated deals as good, bad, super-crappy, etc., and dealers were telling me they were lifting inventory off of their websites.

But again, recently, I am hearing good things about the results coming from their leads. Matter of fact, a lot of dealers are telling me they’re outperforming some of the bigger providers. Why am I telling you all this? Well, I didn’t get this far without being willing to reexamine past targets, be they companies or individuals, I once thought were doing harm. Some of them still are, but I think it might be a disservice to dealers if I don’t keep channels open with these particular vendors.

I am not above changing my mind if the situation says it is the right thing to do. There are a lot of people in the industry who depend on my opinions and judgment when they are selecting vendors. I will never sell you out. The truth is usually entertaining enough. Now, if you’ll excuse me, I think there’s another Republican debate on TV.

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