Fleet-ing Thoughts

2009-11-30T09:14:00.000-05:00

The Fiesta Movement: The Start of A Revolution In Vehicle Marketing?

Vol. 5 No. 3

I think that the metrics from Ford’s ground breaking “Fiesta Movement” will reverberate, and effect the approach to “Tier 1,” “Tier 2” and “Tier 3” automotive marketing for many years to come.

Just in case you didn’t catch his article in Automotive News On October 16, 2OO9:

It's Fiesta time on Facebook et al.

Laura Clark Geist

Automotive News
October 26, 2009 - 12:01 am EST

By orchestrating videos and posts on social-networking Web sites such as Facebook, Ford Motor Co. says it is generating lots of interest for its upcoming small car, the Fiesta.

For example, 4.8 million people have watched Fiesta-related videos posted on youtube.com by people provided Fiestas by Ford.

Social networking sites, widely used by young people, provide automakers with an inexpensive alternative to traditional media such as TV and radio.

"For basically the cost of renting 100 [European Fiesta] vehicles, we have name awareness on Fiesta that is similar to what an Edge or Flex is after two years of traditional advertising," says Jim Farley, vice president of global marketing and Canada, Mexico and South American operations.

The effort began in April when Ford provided Europe-built Fiestas to 100 social media users to drive for seven months. The users agreed to blog and post videos about their experiences on social networking sites while driving the Fiesta. The users were not paid or told what to say.

Each month the users participated in activities, such as visiting a skateboard park or ziplining. Each user posted at least one video a month -- with or without the car -- about those activities on a social networking site or Ford's fiestamovement.com.

The social networking resulted in more then 600,000 photo views on flickr.com and nearly 3.2 million impressions on twitter.com, the automakers says.

Spreading the word

Results of Ford's social networking for the Ford Fiesta

• 4.8 million views of videos on youtube.com

• 3.2 million impressions on twitter.com

• 600,000 views of photos on flickr.com

Here are links to a sampling of postings.

• flickr.com/photos/oprettyboy1/4034044855/

• twitter.com/Fiestavus/statuses/5069520563

• facebook.com/pages/Fiesta-Groovement/75097204622?ref=nf
Source: Ford

Ford also is conducting consumer ride and drives with the Fiesta at events in 300 cities. They started in May and end in mid-December.

From social networking and the events, Ford says in five months it generated 50,000 hand-raisers, people who have signed up for more information. Ninety-seven percent of the hand-raisers do not own a Ford Motor Co. vehicle.

Ford says its research shows that 40 percent of vehicle shoppers are now aware of the Fiesta, higher than awareness for two Fiesta competitors already on the market, the Toyota Yaris and Honda Fit.

The hand-raiser "numbers are impressive given that this was an underground movement," says Wes Brown, analyst with Iceology, a Los Angeles marketing consultancy.

But he warns that Ford needs to follow through with interested consumers "or they will be on their keyboards blogging about how no one contacted them."

Connie Fontaine, Ford Motor Co. brand content and alliances manager, says Ford learned in the Fiesta social-networking effort not to interfere with the creative process. The users' negative comments about the car gave the campaign more credibility, she says.

Fontaine says the company plans to approach the users to help launch sales of the Fiesta next summer.

Ford hopes images posted by Fiesta drivers drum up enthusiasm.

2009-10-25T08:21:00.010-05:00

Vol. 5 No. 2

The Amazing Success of AFLA & the 2009 AFLA Conference: An Example of How True Leadership and a Team Can Make Difference!

I know I haven’t written in this blog in a loooong time. While no excuse, suffice it to say I’ve been on a year long assignment for a vehicle manufacturer that I find very exciting and rewarding, but unfortunately has not left me with a lot of spare time... more on that topic later.

For now, despite my lack of overall time to make blog entries (even the amount of time it took to get this one out is shameful!), I would really be remise if I did not make some comments about this year’s annual Automotive Fleet & Leasing Association Annual Conference, at the Arizona Biltmore in Phoenix, AZ, September 9-11, 20009. Of course, even time challenged as I was, I would never miss this event if at all possible – since 1986, over 23 years, I think I’ve missed only two AFLA events (geez, I must have started when I was 6 years old).

course this year had a fantastic schedule of speakers, which included up to the minute industry analysis and forecasts (see the AFLA Web site at www.aflaonline.com for complete detail, and my own contemporaneous “tweets” at the time my twitter page at Car_Esq - http://twitter.com/car_esq); and once again I got to catch up with old friends in the business, some of which I’d lost touch with during this very busy and challenging year or so. But what really made this meeting, and this organization extra special and noteworthy right now is the dedication and drive of its President throughout this year, who just happens to be one of my oldest and dearest friends in the car business, Mike Antich, the long time Editor and Associate Publisher of Automotive Fleet Magazine.

It’s said that results speak for themselves, and in this case, I think they do tell a lot of the story. Despite the world wide financial recession, that irrefutably has damaged the US car business (and fleet business) worse than any time at least in the last 40 years or so, and again, despite massive industry budget cut backs, travel restrictions, unemployment, etc., Mike managed something with the AFLA Annual Conference, unparalleled this year for any automotive industry association meeting that I’m aware of, that is, a fantastic RECORD ATTENDENCE FOR THIS YEAR'S ANNUAL CONFERENCE…the highest attendance on record since the organization’s formation 41 years ago!! Again, such an achievement would be amazing in an average year, in the midst of possibly the worst car business recession in history, its truly mind boggling.

Then again, perhaps it isn’t a surprise, as throughout the year evidence of Mike’s tireless work and enthusiasm for the organization is visible in all facets of this, my favorite car industry group. From the state of the art Web site, videos, and podcasts (note: this year’s entire conference was filmed for NIADA’s online TV network, and, in addition, Chuck Parker’s Automotive Digest did lots of individual video interviews… even my old friend, past President, Mark Conroy had his roving “on the fly” video camera for interviews), to the frequently published, members only industry White Papers, to the membership and visibility drives, Mike’s boundless energy and positive force can be seen throughout this revitalized organization.

I have to say that for the last year or so, I’ve been less active in AFLA then year’s past, but given Mike’s and his team’s influence (the incoming/current President Tom Donato, and the new Executive VP Lori Rasmussen, and of course, all the folks at Ewald Group that manage and organize day to day activities), I am moved, personally, to now get back into the swing, and do whatever I can, whenever I can do it, to keep the momentum going. More than a few folks I talked to at the Conference feel the same way, which will undoubtedly lead to an even more vital and vibrant AFLA of the future. Mike has set the bar very high indeed.

Congratulations Mike, my hat is off to you, not only for what you have spearheaded at AFLA, my favorite automotive group in the industry, but in proving, beyond doubt that one leader, with the right team, with drive, energy, creativity and enthusiasm, can defy all odds and create vibrant incredible positive growth, support and achievement for an car industry association, despite these very challenging times that seems to have caught everyone else in a mental and energy quagmire (with results like that, maybe you should run for national political office?).

...And I Can't Fail to Mention

One last thing, although I’ll leave the detailed account of the this year’s AFLA Conference to the AFLA Web site (with their write-ups, video etc), I would be remiss too, if I didn’t also offer congratulations to the nine new inductees to the Fleet Industry’s “Hall of Fame,” especially and specifically Ed Bobit, the Founder and Executive Director Emeritus of AFLA (and definitely my oldest and dearest friend in the car business), and the Founder and Chairman of Bobit Business Media (THE fleet industry media resource). I think everyone in the business would agree that in any fleet “Hall of Fame” convocation, Ed has earned his spot at the head of the table many times over…

2009-08-06T11:29:00.001-05:00

Vol. 5 No. 1

Yo! Sorry I’ve gone dark these last few months (so far this year, gulp!)…

I’ll be writing again soon – needless to say the car business is as challenging (and exciting) as ever… more details to follow.

2008-12-04T08:54:00.006-05:00

Vol. 4 No. 11

The Engine of Democracy!

Go to TheEngineofDemocracy.com and Help Ensure that We Maintain an Auto Industry in the US…

Sometimes it becomes very questionable what motives drive Congress. It seems that the approval of a $700 billion bailout for banking and Wall Street passed quickly, without much of a problem, and with few recriminations blaming “management” for a financial meltdown clearly of their own making. Not only was there no long term examination of business plans etc., but, as released just a few days ago, over half of the money has already been disbursed, that is, $350 billion, without very much oversight, at least according to the General Accounting Office report. Yet approval for $25B in loans (not a bailout) for the American “Big Three” US automotive manufacturers is in serious question, on the pretext that the industry set the seeds of their own destruction, in poor management practices? This seems absurd for a whole host of reasons.

FIRST, as to the impact the domestic auto industry has on the nation’s economy, take a look at http://www.autojobsmatter.org. Even a cursory look paints a very clear picture. This from the Alliance of Automobile Manufacturers (BMW, Chrysler, Ford, GM, Jaguar/Land Rover, Mazda, Mercedes, Mitsubishi, Porsche, Toyota & Volkswagen):

America’s automobile industry is the engine that drives the US economy; no other single industry supports so much US manufacturing or generates so much retail business and employment
1 out of every 10 US Jobs, or about 13 million, is auto-related
Almost 4% of the US Gross Domestic Product (GDP) is auto-related
Every auto plant job generates about 5 jobs among suppliers and the surrounding community (CAR); by comparison, a Wall Street job generates 2 additional jobs (Bloomberg)
Auto account for $690 billion of US retail sales, or about 20% of all US retail sales
More than 90% of new vehicles are financed with credit, requiring that consumers have the ability to borrow money
(…I’ll will come back to this last one in a minute)

Now this from a Memorandum from the Center for Automotive Research:

The auto industry has one of the largest economic multipliers of any sector of the US economy & in many states, employment in automotive or automotive parts manufacturing ranks among the top three manufacturing industries
The rapid termination of the Detroit Three in the US would result in:
Lost Jobs:
· Nearly 3 million jobs lost in the US economy for 2009
· 239,341 jobs lost at the Detroit Three
· 973,969 indirect/supplier jobs lost
· 1.7 million spin-off (expenditure induced) jobs lost
Lost Income:
· US personal income would be reduced by over $150.7 billion
· A total of $398.2 billion in personal income would be lost over the course of three years
Lost taxes (local, state and federal)
· A loss to the government of $60.1 billion in 2009
· $54.3 billion in 2010
· $42.0 billion in 2011
A total government tax loss of over $156.4 billion over three years

SECOND, I think its disingenuous (and ironic) that Congress’s response to not supporting the auto industry in government loans seems to be the idea that poor management, that is, not making enough energy efficient vehicles, precipitated the need for auto industry government loans, when its clear that the collapse of the credit market (see the highlighted bullet point above as it relates to retail vehicle sales, in addition to the manufacturers ability to borrow funds), and the resulting collapse of the economy (at least for all things financed), was the overwhelming culprit – yet the government saw fit to bail out (not loan) that industry to the tune of $700 billion with apparently few recriminations for what was irrefutably bad management practices, poor ethics, and lack of oversight.

Has anyone noticed, for instance that the price of fuel has nose-dived and yet the sale of new cars last month was still horrendous? Or that car companies that make the most fuel-efficient vehicles also having taking tremendous hits in sales totals (Honda, for instance). The financial crisis that the domestics find themselves in have very little to do, today, with their management decisions, and everything to do with the effects of Wall Street’s crisis.

And finally, I have to say that this popular uprising to auto companie’s use of corporate jets and other management benefits also seems to be the biggest of boondoggles. It seems to me that Congress didn’t really add anywhere near the emphasis to Wall Street’s almost “legendary” past and continued “executive perks?” Could it be that a lot of government and especially Treasury personnel come from Wall Street had some influence on this? I just saw a notice today that said that Merrill Lynch’s annual bonuses will be down 50% this year…and that’s sacrifice?!? I know some very good auto executives and auto vendors that haven’t seen a substantial bonus at all in years…and this, not using the government’s bailout money as the bonus pool.

If anyone reading this feels the way I do, and wants to do something about it or at least make your opinions heard, take a look at the

www.theengineofdemocracy.com, created by a coalition of organizations representing more than 6 million jobs related to the automotive industry.

As it says from their recent press release:

“Automotive employees, retirees, car owners, auto supplier employees, dealership employees, mayors, state legislators and interested citizens will be encouraged to go on the site and add their stories about America’s car industry and its impact on their lives. Visitors also will be encouraged to write their Congresswomen, Congressmen, Senators, Secretary Paulson, President Bush and President-Elect Obama – as well as legislators from other states – to encourage the U.S. Government to approve a bridge loan for America’s car companies.”

Although the auto industry has always been cyclical, this is the most critical downturn, and critical time, in the industry’s one hundred year history in the United States. To my way of thinking, it is the highest priority that we all rally now to ensure it and our future, and be heard by those who can make the difference in averting a catastrophe.

2008-11-09T10:12:00.001-05:00

Volume 4 No. 10

The JD Power Automotive Internet Roundtable 2008…Once Again the Best Event of Its Kind This Year

Or, My Tribute to ‘Gil the Crab’

Due to time constraints and lots of other activities, I’m a bit late with a blog entry on the JD Power Automotive Internet Roundtable which happened October 7-9 (once again in wonderful Las Vegas, NV), but it was, again, one of the most significant events focusing on the automotive industry and emerging Web technologies. Indeed, given all of the carnage in the financial and automotive world, I am happy to say that both the attendance and the program topics were as populated and vibrant as ever.

The effects, influence and ways to harness the power of social media and mobile communications, also once again this year dominated the topics discussed, but this time took on a closer, more discriminating “ROI” type examination. This year, it seems uniformly accepted that MySpace, Facebook, and social networks in general can attract attention, but in the “bottom line” thinking one would expect when very survival depends on cash flow, the question was “does this attention sell cars?”

The Wisdom of "Gil the Crab"

Given my time constraints, and the late nature of this entry, I’ll skip the overview of speakers, panels, etc. (that’s best to be found on the very comprehensive run down and video on JD Power’s own blog anyway), and get down to what was, to me, the best part of the entire event and what is representative of the current “state of the industry” as well as anything that could be discussed. Specifically, this was when Tom Peyton from Honda, on stage with the leaders in the social media world, recounted how, when his advertising firm introduced a comical animated “Gil the Crab” character spoof, within 24 hours the crab itself had 100,000 MySpace friends -his pointed question (which I paraphrase), “How do 100,000 losers with obviously too much time on their hands, that would befriend an animated crab, help me sell cars?”

The fact is, while obviously the mavens of MySpace had opinions, this question was never fully answered. How could it be, when, in fact, over 50% of the folks on MySpace are under 18 years of age, and another 15% are their parents, monitoring these minors activities. The truth is, while questions as to visibility, brand recognition, impressions, etc. can be well documented with metrics, no one seems to able (or want ) to drill this buzz down directly to true vehicle sales caused by the buzz –that is, I guess one would assume that in this assemblage of the “best and the brightest” in social media, if they “could have” they “would have” and I can tell you that they didn’t…

So what does this observation mean? Does it mean that the social media/social network wave has already crested? Certainly not, as the industry continues to grow both in volumes and varieties of media and members (from the giants Facebook and Myspace, to the much more professional and specialized focused sites in various industries), its visibility and influence on adults will only increase, and so the automotive industry will only increase their present spend (indeed, it was said more than once, by more than one manufacturer, that, with overall collapsing advertising and marketing budgets, the only area that will see any increase in spend in the shrinking pie will be Internet expenditures, and of that the area that is projected to have the highest percentage increase in spending is the social media and mobile categories). Also, what has become painfully obvious is that there is a whole new generation of consumers coming down the road a few years from now who, by there very experience, will garner most of their information from the Web (not from television, newspapers, etc), and in that, mostly from social media platforms – so experience now in how to reach these folks is of value for many reasons.

No, what I think it means, in these very challenging times, is that new marketing and promotion campaigns focused on social media, will overall, take it slow, test frequently, and require a “cleverness factor” in it all; in this new environment, it is not who can come up with the most witty, or even the most “watched,” campaign, but the institution that can mark the most provable ROI, that is, those players or institutions that can design the most effective mechanism to track metrics around a social media campaign, down to the number of “walk-ins,” “test drives” and “sales” (if that is the end objective).

This is no big revelation or surprise really, its what everyone ought to have been doing all along, right? But in the age of new media, large institutions in particular tend to get carried away with the hype (remember the “real estate grab” theory of the VC’s in the first Internet bubble at the turn of the new millennium) and tend sometime not to hold their folks accountable in the strictest sense of the word. [By the way, I would hazard that the small car dealer is much less susceptible to this malady than the larger institutions, even in “free cash flow” times every promotion expenditure is designed to pull immediate traffic, and, if it doesn’t its shut down without too much delay]

At any rate, I think this new focus on direct accountability (albeit brought on by the necessity of the extreme financial circumstances), is good for the car industry, and the social media industry as a whole…it eliminates unrealistic enthusiasm, and grounds everything into a healthy reality. “Irrational exuberance” or “tulip bubbles” help no one in the long term, and, in fact, set progress back when they inevitably fall down to earth (we are experiencing that now all too well in the credit and housing industry, no?).

Tier 1, Tier 2, Tier 3 - Can/Must it all Work Together in Social Media?

At any rate, this current examination of ROI with a microscope may be a bit painful and impede some dramatic spending surge numbers on social media growth, but in the long run I’m confident that the picture these metrics present will, overall, as compared to other media, be correspondingly dramatic and clear. The fact is, ROI is factor of two things, “return” and “investment,” and, relatively speaking, the investment dollars required to have an impact in new media are so small as compared to traditional advertising that the impact of a well placed effort, with a traceable mechanism in place, I think, can not help but justify itself many times over. The question I would have liked to ask Mr. Peyton at Honda on the effect of “Gil the Crap” is this one, how much did the crab campaign cost relative reaching that many interactive responses in a more traditional media campaign? If there are 100,000 “friends of the crab,” generated from what I’m sure was a comparatively small investment, is it not incumbent upon Honda to then have a system in place to reach out to those active participants in the humor and continue, leverage and expand the dialogue to, in fact, see just how many car sales can be grown from these seeds of a relationship. From my perspective, the activity in generating the interaction was the beginning of the process in identifying just how many MySpace “friends” are at the bottom (as opposed to the top) of the funnel in the car buying experience (by the way, “the funnel” metaphor was used so many times throughout the Roundtable, that the term itself was theoretically “banned” by presenters mid way through the second day). Indeed, social media means, at best for advertisers I think, that active relationships are seeded, but that, in turn, means that more effort and attention has to happen after interest generated to identify an effective ROI (or how many car sales a campaign has generated). I would imagine that under these circumstances for the most effective end results, and accountability of ROI, automotive retailers have to be brought in from the beginning, and the traditional division of “Tier 1” (manufacturer), “Tier 2” (regional advertising association), and “Tier 3” (automotive retailer) advertising sectors have to merge together, so that while manufacturers can initiate the social media relationship campaigns, dealers would be brought in to follow-up on the emerging relationships/communications that results. ‘Gil the crab’s” friends on MySpace can all be regionalized, so, for instance, each Honda dealer in a designated market area could have “befriended” or follow-up up on the program to maintain the identity/communication of the program, which, in turn, would have identified how many ready buyers where influenced in the mix.

But that brings up new issues and ideas, for a new blog entry…

2008-09-25T12:29:00.001-05:00

Vol. 4 No. 9

The Flex Phenomena… Part II

As in the Movie “Used Cars” – You Have to Get INSIDE

I was privileged to be able to study, experience and ultimately educate on all of the unique product feature attributes of the Flex, and drove one for period of time this summer. Although I can tell you that a Crossover is nowhere near the type of car I have always driven (truth be told I’m a luxury car fan, I don’t even like SUV’s), the vehicle grew on me, and for the first time in my existence, I think, I can see myself driving a 6/7 passenger vehicle for more than a brief rental day or two. I have to tell you too, that, at least from the reactions on the road I got, as many people like the new daring design of the Flex as dislike it – when is the last time a new vehicle got thumbs up, horn blowing and “head out to window…what is that?” at even expressway speed? So people do either love it or hate it, but the people that love it, I can say first-hand, aren’t afraid to express themselves.

The real advantage to the Flex though, can’t be understood until someone gets in the car, feels the seats, sees firsthand the size and standard features, peruses a few of the “exclusive” options Ford packed in, and, of course, until one actually drives the vehicle. Again, I drive Jaguars mostly, and this thing drives better, and has better optional features, than a fully loaded up Jaguar XJ sedan, a vehicle that costs 50% to 100% more – I kid you not, it’s true (the GPS system is better, the sound system is better, it handles as well if not better, and those are the first things you notice, I can go on…).

In short, as most reviewers have said, the Flex packs all of the utilitarian features anyone would want, in flexible motif (for instance, it can tow up to 4500 lbs, yet it gets best in class gas mileage for a 6/7 passenger people mover at 24 mpg highway, the seats sit high yet its lower stance and entry construction make it the easiest of Crossovers to get in to and out of, etc.), but also has all of the tech toys found in the “coolest” of luxury vehicles. The thing just reeks cool and high tech inside its boxy euro-type frame (it may not be your style, but it is style).

Social Media and the Flex

Obviously, given my particular interests and observations, I’m very interested in how a new product launch of a game changing vehicle rolls out online these days, as I would have suspected that social media would be a factor and have an effect. The fact is, now, for the first time apart from any other truly polarizing vehicle introductions in the past (as mentioned above), social media, blogging, self expression on the Web is ubiquitous (along with high speed access). Like never before, like-minded “product evangelists” can find each other and congregate on the Web (and not have to physically travel to Spring Hill, when the Saturn was introduced, for instance), so one would suspect that the Flex has already felt some of the effects of social media.

True to form, ironically, while I have yet to see Ford Motor Company embrace the full power of social media for the Flex, a vehicle introduction which seems to be screaming social media if ever there was one, social media sites have grown up organically, quite a while ago, to foster like-minded Flex enthusiasts and early adopters.

Not surprisingly, an “institutionalized” product forum has grown up around the product, at FordFlexForum.com – I say institutionalized because this seems to be the forum for all Ford products, a chronicle for “Blue Over Forum,” the “Fusion Forum,” “Mustang Forum,” the “Taurus forum,” the “Lincoln MKS Forum,” etc., etc. even an “Eco Boost Forum”… it is out of Dearborn, MI, perhaps not a big surprise, so I don’t think that counts as a truly unbiased social media product. Not that it produces bad information, quite the reverse, it’s just that well, it may not produce the most “impartial,” “peer to peer” dialogue anytime soon, methinks.

Flex Fan Orgs Online and FlexFans.Org

Now some think what Flex could use is an easy to use more versatile social network platform, with a visible administrator spokesperson who can actually bring out the best, or worst, in Flex enthusiast’s opinions, emotions, etc. in all forms of Web based media. Add to that a spokesperson for the social network willing to add personally created videos and media “out in the field,” not afraid to be visible and accessible, and, at the behest of online Flex Fans, reach out to the manufacturer, automotive dealers, and consumers on Flex issues. So when the person who thinks all of the above is the irrepressible CarsDiva of CarsDiva.com, then well, you can count on one more independent social network being created around the Flex, a network with a uniquely woman’s perspective (from a unique woman)…that network is the brand new Flex Fans enthusiast network, FlexFans.org.

Unlike the few other social media sites that grew up around the Flex, FlexFans.org, “A Place Where Fans of the New Ford Flex can Congregate,” has some unique features both in its technology and in its active administrator, Demetra Markopoulos. In addition to having all of the “state of the art” functions of a true online network (the integrated “wiki” feature seems most useful, for an ongoing easy to read dialogue of Q & A on the product), including personal pages that can hold blogs, photos, video etc., the CarsDiva has done some useful things so far not done on any Flex related site. For instance, as I already mentioned in Flex Part I in this blog, you can find the most comprehensive, up-to-date compendium of all media vehicle reviews on the Flex (in newspapers, magazines, blogs, etc.) on the site at http://www.flexfans.org/Flex-Reviews.library.

Most importantly, FlexFans.org has a visible active spokesman in the CarsDiva, who I might add, being from the retail end of the business, realizes that you can’t fully understand the vehicle or the market unless you get “down and dirty” on the showroom floor, with the Ford dealers that sell the Flex and deal with consumers on a daily basis: before, during, and after their Flex buying experience. To my knowledge the CarsDiva is the only administrator of a social network devoted to the Flex who has already visited a dozen or so varied Ford stores, most during their scheduled Flex Consumer Event introduction parties (the best kept secret parties out there, although I don’t think dealers wanted it to be that much of a secret), to interact with sales associates and managers, Flex prospects and Flex buyers (at some of my Philly favorites, like McCafferty Ford, Springfield Ford and Holman Ford in Mt. Laurel, NJ).

For a vehicle like the Flex, visiting dealers, prospects, customers etc. would seem a “no brainer” right? To fully understand the dynamics of truly polarizing product, you have to get on the showroom floor and get direct source feedback from the people who sell it, and the consumers who look at it and buy it… Simple yes, customary no…it still amazes me how many folks who build and market cars never experience the sales process first hand, that is, how many have never sold on the floor, or visited a dealership for anything other than a handshake and a picture. It always seemed to me that if this “in the trenches” experience was a mandatory step before you became a high powered executive at a car company, you would have a lot less “out of touch” personnel; not to mention an unparalleled credibility with a dealer group who, every day, have to back and sell the product on the front line. Judging from a lot of social media sites and networks, even fewer automotive focused online community spokespeople and administrators have real world showroom floor interaction and experience (most seem to have simply a marketing or technology background and again, have never ever come close to actually selling a car or the true automotive sales process – there is even one very popular automotive site out there that even charges for an instruction package on how to sell cars to females and be female friendly…offered by a Internet technology specialist, no less? It may make great news story headlines, but my bet is it doesn’t sell any more cars…). Alternately, I think FlexFans.org has some real advantages, not the least of which is fact that the CarsDiva is out there in the field.

To sum it up, I expect big things to come from the Flex Crossover - taking a little longer to ignite, like most game changers, it has all the style and utilitarian leadership elements of a runaway “category killer” (you heard it here first, ….well, maybe not). I also could imagine that FlexFans.org can ride the wave of excitement and be the best place where “Flex Fans can Congregate,” the first (but probably not the last) vehicle enthusiast group or site to grow out of CarsDiva.com and be hosted by the CarsDiva.

2008-09-14T12:10:00.002-05:00

Vol. 4 No. 8

The Flex Phenomena - Part I
Or How I Spent My Summer Vacation…

So the most popular topic in the automotive press now seems to be, once again, “Detroit Bashing” – blaming the current sales/financial automotive crisis that most all manufacturers (except Honda) are now experiencing on their own myopic vision of truck/SUV weighted product offerings, which also is accompanied by those same reviewers extrapolating the data point line for consumer tastes motivated by cheap gas out to eternity. Even industry heavy trade magazines and newspapers have jumped on the bandwagon, with the esteemed trade industry bible Automotive News running successive editorials espousing home company guilt, with Jason Stein’s (the Automotive News Europe Publisher) “A Missed Opportunity” article (July 14, 2008) about GM misreading the market for small cars, and then Kevin Smith’s (August 4, 2008) “Comment” with an essay entitled, “Detroit’s Truck Trauma is Self Inflicted.”

There is certainly some truth in these observations about missing the mark on product line up, but it’s hardly a domestic malady (anyone notice Toyota’s massive investment in large trucks, with the launch of the Tundra and a couple of plants to build them in the US to boot, all launched just about when the market began to collapse?) More importantly, there are exceptions, that is to say, some Detroit manufacturer product introductions that show amazing daring concept and foresight, given that today’s product launch is, in fact, a manifestation of a couple of years of planning - yet I don’t see a lot of ink devoted to these products. In particular I’ve been personally immersed in the product, marketing and retailer roll out of the Flex, Ford’s brand new daring design (read “polarizing”) Crossover. I’m convinced it’s a “game changer” but, while that may be a debatable point, what is irrefutable is that this is an innovative vehicle that proves incorrect Kevin Smith’s assertion that Detroit did not pursue “breakthrough” products for Crossovers in recent year because “they would naturally cannibalize their huge investments in truck-platform SUVs.”

Ford Introduces…The Flex – “Polarizing” Precedes Popular?

While it may be true that not all “polarizing” vehicles introduced in the last quarter century or so where “category killers,” I think it is true that all real game changing vehicles that became high volume world class sales icons did start out with ground breaking style and design, that, invariably, was not immediately recognized by automotive writers and the public as volume winners. Think of the minivan when Lee Iacocca first introduced it for Chrysler Corporation in 1984 (I rememberit very well, geez am I getting old), it was called by the critics a “box on wheels” and not in a complimentary way. A whole new vehicle genre was created with this Chrysler icon, that remained strong for over twenty years, until the “soccer mom” stigma now seems to have fully overpowered the utilitarian features that made the minivan a sales favorite.

More related to Ford Motor Company, how many readers remember when the first Ford Taurus was introduced in 1986? Again, I remember it very well, and, contrary to some opinion it was hardly an immediate run away sensation. It was called the “Robo Cop” car, the “bubble car” one prominent newspaper review called it a “pregnant roller skate” – it became a runaway best seller for its vehicle class, but it had to first get noticed, and the first reaction was not all unanimously positive to say the least.

Finally, I was a Chrysler dealer (unfortunately not a Dodge store) when the innovative and controversial newly designed Dodge Ram truck was introduced in 1994, and again, even though the introduction of that truck alone boosted Chrysler’s share of the domestic truck market to previously unprecedented levels, it was not an immediate, “I love it” reaction from the critics or the public… I recall one reviewer that called it, not in a “glowing” way, a “mini Mack truck.” Explaining this “polarizing precedes popular” phenomena best though, I think ironically enough was Bob Lutz’s with his comments at the time (back when he was Chrysler’s top design/operations guy, when he said something like (I’m paraphrasing here, it’s been a while…), up until that point, they always built the truck design that the most people “liked” in focus groups..but also up until that time, the people that liked those designs never seemed to have really “bought” them in quantity…when that radical truck design was introduced, people either vehemently hated it or strongly loved it, and he reasoned that those that loved it would actually go buy it when it was introduced. They did and still do, and for its “radical” design it would seem.

Who knows whether this will happen with the Flex, but I’m telling you after a first-hand observation and product feature study, the Flex has all of the right vehicle “best in class,” category exclusives, etc. to become, from a functional point of view, a runaway best seller in the crossover market. This opinion, by the way, seems to be shared by just about every vehicle review I’ve read - you can see for yourself the best compendium of all of the reviews on the Flex, in newspapers, magazines, blogs, etc. in the Review Section of the new FlexFans.org site (created by the CarsDiva, see her blog on the Flex as well).

2008-06-30T09:19:00.001-05:00

Vol. 4 No. 7

A Contrarian in the Market…for Cars & Trucks

Some of the best market performers are contrarians; those that don’t follow the crowd and buy value when its unpopular…could it work in the vehicle market as well?

It’s true, if you live long enough, you are around to see various market cycles and mass market psychologies repeat themselves. What really is amazing is that sometimes the same “mass hysteria” or extrapolating the line out from just a few data points sometimes happens on a regularly frequent basis, albeit, perhaps, sometimes extending out a bit more extreme than others. Did you ever notice how, despite any government regulation or legal penalties, we seem to have a crisis in business ethics every ten to fifteen years or so (before Enron and Tyco in this century, there was Drexel Burnham in the late eighties, before Drexel Burnham there was Overseas Investment Services in the early seventies, etc.). I read somewhere that this happens because it takes one business generation of executives to forget the infractions/penalties of the past, and so a new crop go through the same “excesses.”

“Never before in the history of the car business had there been such a violent change in the market as the one that occurred that spring”

Now with new truck and SUV sales falling an incredible 25% last month, and large car sales falling through the roof as well (with some car dealers not even accepting a trade in of a truck or large SUV these days), and, correspondingly, dealers out of stock on new small cars and manufacturers unable to meet demand, the phrase above sounds like it was snatched right out of today’s headline, doesn’t it?

Well, it wasn’t, it was actually written by Lee Iacocca in describing the automotive situation in the spring of 1979, in his 1984 autobiography. Then he was describing the large car/small car situation just after the Shah of Iran was deposed and the disruption of Iran’s oil industry threw the world’s oil markets into a panic. Then, as now, almost overnight large cars that had been in demand all of sudden couldn’t be given away, while small cars, which previously carried heavy rebates, and were a glut on the market, were snapped dup “by Americans desperate for fuel efficient vehicles.” Iacocca wrote that in the first five months of 1979, the small car share of the market “rose from 43 percent to nearly 58%.”

Now I wasn’t in the car business back then (believe it or not, I’m not that old), but I was old enough to remember the situation, and how, in fact, it is eerily similar to the herd mentality we are experiencing today, as evidenced by the reversal in new and used vehicle interest and buying patterns. As I recall then, as now, the price of hard commodities and precious metals also skyrocketed.

Will History Repeat Itself?

The fact is, all of the dire predictions of the price of oil only going up, and the world running out of fossil fuel immediately within the decade turned out to be very wrong. The price of oil fell like a stone in the ensuing years (I don’t remember anyone predicting that it would happen in 1979), and within a few years Americans were back to buying large vehicles, then in the mid-eighties Chrysler came out with the minivan, later that decade the SUV was born, and all of sudden the larger the people mover, the higher the demand and status (and the Ford F-150 became the highest volume vehicle for now how many years running?…except of course this year the record looks like it will be broken).

As Iacocca said, “Somebody yelled: ‘April Fool’s! Gas is cheap again, so give us big cars!”

So…

I’m not predicting fuel is going to get any cheaper anytime soon, nor am I trying to assert that the world is not ultimately running out of fossil fuels. All I’m trying to say is that this immediate “panic” on the world oil markets is a representation of a classical cyclical market run, and that, well, frankly the oil producing countries are taking full advantage of this perceived immediate shortage and world turmoil to maximize the price run up (ask yourself, why hasn’t the oil supply run up to meet the immediate demand, it isn’t because the world is now all of sudden out of oil…). This, in turn, has caused the consumer panic, which, in fact, has lead to the crash (yes, it’s literally a crash) in the value of any vehicle that gets less than about 25 miles to the gallon, and the commensurate increase in sales for almost anything small and fuel efficient.

I recently read a story in a trade paper that reported on the run in old economy cars of the early 90’s on eBay Motors and elsewhere. Old Geo Metros, Honda CRX HF and any diesel powered Volkswagens are selling for $1,000 to $4,000 above Kelley Blue Book value! – this despite having even “more than 200,000 miles on the clock and rust holes big enough to drop a wallet through.” This is hysteria folks, pure and simple.

Baring having any of these old fuel beaters in the garage ready to sell, I suggest that the real value these days is in larger more high end, late model used vehicles, the kind that have gone down with the general market but that aren’t that bad on gas.

Now I know this goes against conventional wisdom, and people are talking about $7.00 a gallon gas by next year, but that’s what contrarian trading is all about, right? In securities or cars…

2008-06-02T12:22:00.005-05:00

Vol. 4 No. 6

Couldn’t Have Said it Near as Good Myself…

A reprint of “The untapped power of owner communities” by Jesse Pickard in the “Headlight: “Digital Automotive Trends and Insights from Avenue A/Razerfish” Blog

Given a very hectic month or so, it’s been a while since I wrote anything in this blog, or have even had the chance to attend some industry events I regretfully missed lately (my loss, automotive fleet and remarketing events are the most informative in the industry and the people attending are the best in the business). I ran across a recent blog however, that was so well done, and spoke on an issue so prevalent on my mind recently, that I thought, with approbation, I’d reprint it in its entirety. Jesse Picard’s observations are not only accurate and insightful, but are far more "literate" presented than my ramblings and come from an authority.

Needless to say I like Jesse’s observations on Mini’s “Owner Lounge” and agree with his conclusions. See what you think.

May 2008: Social influence marketing

The untapped power of owner communities

When it comes to shopping for a car, few things are more influential than the opinion of an actual car owner. A trusted opinion can instantly crush or inflate a consumer’s confidence in a vehicle. Third-party automotive sites recognize this influence by prominently featuring the opinions of car owners through features like user reviews, ratings and discussion boards.

MINI’s Owner Lounge encourages sharing the “motoring” culture

Interestingly, most automaker sites have steered clear from featuring car owner content. As it stands, a vehicle site is usually comprised of one-sided messages that tend to be met by skepticism by empowered shoppers. If a consumer can instantly see what current owners think of the vehicle they are considering, why even pay attention to brand messaging? This has become more apparent as automakers continue to describe their new offerings as the “fastest,” “safest” and “most powerful.” In the mind of the consumer, an OEM site is just a place where the latest raw information is hosted. It is a great place for specifications, but does not actually “sell cars.” In order to become a true selling engine, automakers must use Social Influence Marketing to unearth trusted owner opinions on their vehicle sites.

Step one: Evolving the owners section
The opportunity for automaker sites to fully harness the power of social influence starts with evolving their owner sections, home to a powerful, but dormant, community of current customers. In its present form, the owner’s section is a place to do things like make monthly payments online and schedule maintenance. This might appear sufficient, but the prevalence of online driving clubs indicates that car owners are highly active in online communities and would appreciate a more immersive, social experience. It also shows that there is a strong culture around each car to tap into. The next-generation of owner’s sections is a social network first and a tool second. Mini does this with its Owner’s Lounge, where drivers can connect with one another, post car-related events and share pictures. The entire lounge evokes the playful and hip Mini culture. The Owner’s Lounge also dedicates a section to promoting driving clubs that have developed organically. Recognizing these organic communities is a small, but critical step in the evolution of an owner’s section. Mini could even improve their Owner’s Lounge by offering deeper integration of organic communities. Given the guaranteed traffic from the current set of tools, automakers should be able to quickly develop the critical mass needed for a powerful car community if the tone and feature-set is specific to the car brand’s culture.

Step two: Connecting owners and shoppers
Creating a vibrant owner community is a difficult, yet highly rewarding task. Once up and running, a community will offer customer insights that are often unattainable through traditional forms of market research. For this reason, it is easy to be satisfied with an insular community of owners. But at this point the job is only half-done; your owners might have produced very positive and persuasive content in the owner’s community, but as it stands new shoppers can’t see any of it. In order to maximize the ROI of community investments, automakers must integrate what are currently two silos: owners and shoppers. If done well, the integration will feel natural because car shoppers are desperately in need of objective sources of expertise, and that’s what the owner’s community possesses.

Integrating the owner and shopper silos means building connective features that exist both on the owner’s site and more importantly, in prominent areas of vehicle shopping pages. A baseline example is a feature that allows shoppers to ask questions about car models to registered owners of those models within the community. Owner opinions can also used in a way to support brand messaging.

For instance, if an automaker is looking to communicate that a truck can handle the winter elements, it should surface the opinions of car owners from the northern-most states. Maybe this exists as a photo album of owner’s trucks tackling the most extreme conditions or perhaps it’s a winter off-roading guide that owners have collaborated to create. Essentially, almost any message can be communicated through owners. And as the owner’s community grows, more innovative features can be created.

Step three: Sustaining the community
The next-generation of owner’s sections is ever-evolving and unpredictable. It requires continuous attention and dedicated resources, primarily in the form of community managers, who are responsible for the maintaining the health of the community. An experienced community management team knows how to energize users with new features and quell firestorms that erupt from member discontent. They also can be responsible for distilling user insights and advocating the interests of members to corporate stakeholders. The role of the community manager is especially pivotal during the initial stages of community development.

Lastly, to sustain an owner’s community, automakers must maintain an unyielding commitment to authenticity. This means that the automaker must be comfortable with having negative owner statements surfaced and transferred to new shoppers. Any manipulation or censorship of this content risks the entire value proposition of all community offerings. In fact, the presence of negative content is needed to establish immediate trust in both owners and new shoppers.

With community management and authenticity established as two cornerstones, the community efforts are poised to flourish. There will undoubtedly be speed bumps and hiccups, but they are fully worth it as tapping into the social influence of vehicle owners will transform the OEM site from a one-way advertisement to a highly-persuasive selling engine.

–Jesse Pickard

2008-04-15T09:32:00.003-05:00

Vol. 4 Number 5

Memories of Really Dumb Rides
So How Many of You Remember the "Dodge La Femme"?

So thanks goes out to Al Haas the “On the Road” columnist from the Philadelphia Inquirer for this bog entry. Although technically not dealing with fleet or remarketing, I couldn’t resist comment on his recent March 16 article entitled, “Memories of really dumb rides” which defines what Al considers the four dumbest rides in US history. Now the first two had launch dates before my time, but I was around for the last two, and, at any rate they all were pretty dumb:

1) The Dodge La Femme
2) The Edsel
3) The Subaru BRAT
4) Suzuki X-90

Now everyone is aware of #2, The Edsel, and while the BRAT (stood for Bi-drive Recreational All-terrain Transporter…of course, we all knew that, right?) was nowhere near as well known, it probably earned its “dumb” rep not as an immediate sales fiasco (it was around for at least a half a dozen years), but because of its “jump seat welded in cargo bed,” created to avoid the 25% import tariff on imported trucks at the time. As I remember it, #4, the Suzuki X-90 was a creation of a different sort, that is, since the Suzuki Samuri SUV (which I remember sold pretty well and was well liked) got hit by Consumer Reports on its propensity to roll over during sudden steering (a bad thing), Suzuki reaction was to build this two-seat, four wheel drive coupe that was neither fish nor fowl, that had neither the Samuri’s off-road capability, nor a car’s on road ride…it fell on its sword, so to speak, only two years on the market. At any rate, the focus of this blog entry is a vehicle that Dodge launched in the 1950’s, way less well known than the Edsel but 100x more silly (or at least it seems that way now), the #1 vehicle on Al’s list, the Dodge La Femme (yep, there is even a Web site dedicated to it now, and I bet its been viewed by far more people than ever saw the car in its day...).

Apparently back in the 1950’s, Chrysler Corporation for the first time noticed that women were starting to buy a lot of cars, and figured (logically?), that the best way to reach that market was to produce something special, something that seemed to feed into and propagate every stereotype you could imagine about female buyers in that day and age (or any other)…and so was created what could only be called the female stereotype caricature car, the Dodge La Femme. The 1955/56 offering was a Dodge Royal Lancer that overdosed on “pink” or as Al says, a “Royal Lancer on estrogen.” Okay, so the exterior was not pink exactly, but two tone “Sapphire White and Heather Rose” (“Heather Rose”?! that’s um, pink to you and me), with the moniker “La Femme” emblazoned in gold script on the fenders (oh yes, that would go well at the supermarket). The interior, was, of course, pink tapestry upholstery featuring rosebuds (really, I couldn’t make this up).

Now, of course it gets better, as one wouldn’t think of offering this car to women without a few other signature rosebud necessities as well, as the car purchase included the same rosebud interior print on an accompanying raincoat, rain bonnet, umbrella, and, a purse – just about everything the modern little lady might want in life…

I think Al says it best, “Even back in those Ozzie and Harriet heydays, women weren’t buying this brand of patronizing. During the two years the cars were offered, a grand total of 2,500 La Femmes were sold.”

So what do you think women car folks, is pink still the operative color of the day for women buyers, women web sites, etc.? Do you think designer raincoats, bonnets, umbrellas and purses really do enhance the car buying experience for a women consumer? As silly as this all sounds, do things like this, in a much more subdued way, still occur in marketing to women buyers or are large corporations (if not all retailers) more in tune? In the car market? In other product marketing?

Let me know what you think...

2008-03-19T08:27:00.000-05:00

Vol. 4 No. 4

Two Recent News Reports that Tell a Very Interesting Tale
Both Automotive Manufacturers and Retailers are Moving to New Online Media…in a Big Way

So I recently read two news stories, one in an automotive industry trade magazine about a week ago, and one from an advertising trade magazine two days ago. They both seem to give quantitative proof to what had been indicated, that is, that automotive marketing is moving online Web 2.0 in a big way, and dealer ratings, video and social media will garner the lion’s share of the growth.

So clear are these messages, I reprinted each article in its entirety.

The first is a synopsis of research study data of a report by The Kelsey Group, as reported in AutoRemarketing on March 10th. As compared to this year v. last year, 59% of the dealers polled said they would use video on their Web sites v. 33% last year, 43% said they would use online customer ratings and reviews v. 29% last year, and, finally, the largest jump of all, 33% said they will use social networking sites v. 15% last year.

Also, 59% said they would increase online spending v. only 17% said they would do so for traditional media (while 46% will decrease traditional media, and only 8% will decrease online spending).

It paints a pretty clear picture where dealer’s heads are at these days…and where retailers go, the manufacturer follows – or is it the other way around, I’m not sure…

Take a look at the second article, about General Motors in Advertising Age…

“The country's third-largest advertiser is getting ready to shift fully half of its $3 billion budget into digital and one-to-one marketing within the next three years.”

And, “GM's Brent Dewar, VP-field sales, service and parts in North America, told Ad Age last December that the marketer will try to persuade its regional dealer ad groups "to shift their focus to digital vs. spot TV" starting this spring after the dealer co-ops, which spend some $500 million annually, are revamped.”

So while I’m not smart enough to figure out what is “cause” and what is “effect,” the direction the automotive world is turning, at least in terms of marketing and promotion, that is, getting people in cars, is pretty clear, at least for the near term.

Now I don’t know how all this specifically will effect fleet and remarketing, let alone how far and how fast the greater automotive world will actually move in this direction, but changes are clearly on the horizon, and hopefully we will do something to move move it forward in this emerging frontier…

As Seen in AutoRemarketing
Dealers Shift Toward Online Technology, Marketing
March 10, 2008
PRINCETON, N.J. — More and more dealers plan to start using Web 2.0 technology in their advertising campaigns, and most intend to increase spending on Internet marketing in the next year, according to a recent study.

A survey from The Kelsey Group indicated that 59 percent of dealers said they would utilize Internet video on their Web sites in the next 12 months, versus the 33 percent who already use the technology. Additionally, the number of dealers who implement online customer ratings and reviews is expected to rise from 29 percent to 43 percent, officials indicated.Meanwhile, 33 percent of respondents indicated they will use social networking sites, an increase from 15 percent."

These findings point to a significant disruption in the auto dealer advertising space," explained Neal Polachek, chief executive officer of The Kelsey Group. "There are valuable opportunities for traditional and new media companies that tune into dealers' adoption of Web 2.0 technologies and align with dealers' online media-buying intentions," Polachek added.

Dealers are also shifting the manner in which they advertise. Sixty-two percent of respondents claimed they plan to boost online media spending in the next 12 months. Only 17 percent said they will do the same for traditional media.Likewise, only 8 percent of dealers intend to cut online spending, while 46 percent will decrease traditional media spending.

The Kelsey Group gathered information for the study through an online survey in February. The next study is scheduled for the fall.For more information, visit http://www.kelseygroup.com/.

As Seen in Advertising Age
GM Roars Forward Into Digital Ad Channels
Changes at Dedicated Media Shop Lay Groundwork for Auto Giant to Shift Spending to Encompass Multiple Online Channels
By Jean Halliday Published: March 17, 2008

The country's third-largest advertiser is getting ready to shift fully half of its $3 billion budget into digital and one-to-one marketing within the next three years. And as GM goes, so goes the entire automotive industry -- the leading advertising category that pumped some $9.42 billion into the ad economy last year.

The goal is to go well beyond the banner -- GM spent $197 million in online ads last year, according to TNS Media Intelligence -- to encompass gaming, search, mobile and a broad array of interactive applications, according to several executives close to the automaker. In the last few years GM has shifted several hundred million dollars from TV and print to digital and one-to-one, and that trend will accelerate, said the executives.

The clearest sign yet of the automaker's plans came in the last couple of weeks with changes at its dedicated media agency GM Planworks. First Dennis Donlin, longtime general manager and president of the agency, left and was replaced a few days later by Ken Taylor. But Mr. Taylor, who was previously exec VP-group client leader at sibling Starcom USA, Chicago, has been tasked not just with leading the agency's efforts on behalf of GM, but also with reintegrating Planworks into Starcom MediaVest Group.

'No offices will close'Laura Desmond, CEO of Starcom MediaVest Group for the Americas, declined to comment on specifics of the move, but said, "As GM has streamlined and got more agile, it seemed only appropriate to move from a siloed business approach to a more flexible, nimble approach that'd allow them to access all our centers of excellence." She denied this meant a total disbandment of Planworks, noting that no offices would close.

The idea, according to Ms. Desmond and Betsy Lazar, GM's director-advertising and media operations (who was speaking to Automotive News), is to break down walls at Planworks -- until now a self-contained business unit for GM -- and allow it to share the resources of the entire SMG Group. That means GM will be able, for example, to tap the expertise of MediaVest's branded-entertainment division, run by Brian Terkelson. It'll also be able to take advantage of SMG's buying and planning clout, and tap MediaVest and Starcom's top researchers. Importantly, it will also allow Digitas and SMG to work closely together on digital planning and execution.

SMG will work with GM, much like the way it works with Procter & Gamble or Coca-Cola, bringing a range of resources to bear.

Mark LaNeve, VP-vehicle sales, service and marketing for GM in North America, declined to talk numbers, but said, "Like all major marketers, we've moved into digital media in a big way," adding, "but the other media types are still very important and will still be a big part of our mix."

Online product researchBut a pattern is developing among automakers whereby TV and print are deployed for launches in order to raise awareness, while more of the continuous branding and sales activity shifts online -- as automakers and many of their dealers accept that the purchase process increasingly begins, and sometimes even effectively ends, on the internet.

At a time when a slowing economy is taking a toll on advertising, the prospect of billions of dollars fleeing TV, print, newspaper, radio and outdoor is unwelcome, to say the least.

The worse news for traditional media: GM's Brent Dewar, VP-field sales, service and parts in North America, told Ad Age last December that the marketer will try to persuade its regional dealer ad groups "to shift their focus to digital vs. spot TV" starting this spring after the dealer co-ops, which spend some $500 million annually, are revamped.

Hyundai Motor America is doubling its online ad spending this year over 2007, according to VP-Marketing Joel Ewanick, who declined to offer specific figures. "Online is getting to the point where it may be more important than the 30-second TV spot."

2008-02-24T10:42:00.003-05:00

Vol. 4 No. 3

The Coming Ad Revolution, or Why I’m So Enthusiastic About Online Communities…

Esther Dyson’s Observations Have it Right Again

Esther Dyson’s predictive foresight on Internet has harkened back way over decade when she wrote the testament to the Internet age, Release 2.0: A design for living in the digital age back in 1997. She is one of the foremost authorities on the Web today, and so when I read her recent editorial published in all editions of the Wall Street Journal a week or so back (ironically, when I was just wrapping up another NADA Convention), I took note, or more so, reassurance that I am on the right track.

I preprinted it, in its entirety below and want to say that I believe that the power of two way permission customer based, two way interaction and social networks will forever change the landscape of marketing communications in general, in every industry, but the changes will be most profound in the automotive industry – the industry that historically in the US, has spent the most on marketing and communications but has been the most reluctant to change in strategy in tactics (maybe a byproduct of historically having so much money to spend) on how to reach the customer.

…And Next Entry, I’ll Let All Know How I’m Changing Myself, How I’m Redirecting Everything to Focus on, Learn, Create and Lead in this New “Ad Revolution"

The Coming Ad Revolution
By ESTHER DYSON
Wall Street Journal
February 11, 2008; Page A18

While the big news in the online world focuses on Google, Yahoo and Microsoft, a more profound revolution is taking place on the online social networks: The discussion about privacy is changing as users take control over their own online data. While they spread their Web presence, these users are not looking for privacy, but for recognition as individuals -- whether by friends or vendors. This will eventually change the whole world of advertising.

The current online-advertising model will become less effective, even as it gets increasingly sophisticated. New players are emerging to devalue the spaces that the ad giants are currently fighting over. Companies you've never heard of called NebuAd, Project Rialto, Phorm, Frontporch and Adzilla are pitching tools to Internet service providers that will enable them to track users and show them relevant ads. This approach (called behavioral targeting and already in service by ad networks that track users through so-called tracking cookies) undercuts traditional online publishers, who employ content to lure users and to sell adjacent ads. Now, the ISPs can sell advertisers direct access to the same users.

Take user number 12345, who was searching for cars yesterday, and show him a Porsche ad. It doesn't matter if he's on Yahoo or MySpace today -- he's the same number as yesterday. As an advertiser, would you prefer to reach someone reading a car review featured on Yahoo or someone who visited two car-dealer sites yesterday? His identity is still private: The ISP and behavioral-targeting networks don't know 12345's name and don't care. They just know what they think he wants.

This market will get more competitive, and users will be barraged by ads to which they will pay less and less attention. Call that public space, a world of billboards and cacophony. Even though the ads will be more "relevant" than ever, users will increasingly tune them out.

Now consider the new world of social networks. Facebook, unwittingly or on purpose, has been teaching people to manage their own data about themselves. Facebook's launch of the Beacon service -- which informs Facebook of members' activities (i.e., purchases) on other sites -- was a PR fiasco. But it still familiarized millions of users with the notion that they can control information about themselves online -- and determine to whom it is visible.

What might seem like a horribly complex and tedious task to their elders -- categorizing "friends," managing news feeds, handling intersecting communities of contacts -- feels natural to the Facebook users of today. They want more granularity of control, not less.

Each user determines who will get into his own garden, whether friends or vendors. Look at Dopplr (where I plan to become an investor), a site for travelers. I list my trips, and see how they intersect with my friends' itineraries. "Oh, we'll both be in London April 4? Let's get together!" Or, "Juan and Alice will be in town next Tuesday. Let's hold a dinner!" You can imagine or visit equivalent approaches for books (a hypothetical Amazon 2.0, new and more personalized), clothes (Glam.com and Stardoll.com), and even money management.

So what's the business model? I'll "friend" British Airways, which will say, "We see you're going to Moscow next month. Why not fly through London and we'll give you 10,000 extra miles?" I'm no longer in a bucket of frequent travelers, my privacy protected. I'm an individual with specific travel plans, which I intentionally make visible to preferred vendors. British Airways, of course, will pay Dopplr a handsome sponsorship fee to be eligible to be my "friend" (just as a Nike rep might pay to sponsor a basketball game and be part of the community). Someday NetJets may show up, offering to ferry me and my friends to a conference we'll be attending together.

I'm far more likely to respond to BA or NetJets within a trusted site, and for a specific offer, than I am to heed their ad while reading a newspaper article on the troubles in Russia. (As for Orbitz, my old standby: After five years, it still doesn't acknowledge my preferred airlines.)

The new model creates a more trusted environment for reaching high-value, frequent purchasers, whether of airline tickets, electronics, clothes or other items. Where does that leave the less-frequent purchasers? Probably looking to their friends rather than to advertising for advice. I'm an expert on travel; my friends may look to me for hotel choices. When I'm in the mood to buy a book or a new computer, I'll check out what my friends on Facebook are doing.

This does not mean that traditional online advertising will go away, just that it will become less effective. Value is being created in users' own walled gardens, which they will cultivate for themselves in real estate owned by the social networks. The new value creators are companies -- like Facebook and Dopplr -- that know how to build and support online communities.

Ms. Dyson is an investor in companies including 23andMe, Eventful.com, Meetup Inc., WPP Group and Zedo.

2008-02-13T19:31:00.002-05:00

Vol. 4 No. 2

The More Things Change…The More They Become Different…

Women, Cars, NADA 2008 Annual Convention, and CarsDiva.com

I’ve been in the car business a very long time by most standards, over 22 years now. As always though, at the National Automobile Dealers Association 2008 Convention, there are dealers and other attendees who make me look like an absolute rookie. , The 91st annual NADA Convention, as in previous years, still overwhelms me with the sheer size and scale of the event.. Anybody who is anybody in the retail end of the car business attends, and no matter how high up on the ladder, seems accessible for at least these few days a year – this is the only convention I recall where all the top guys of the industry make a point of being available at their booths on the convention floor (and at meetings, and parties, etc.), to meet and greet all of the attendees that they can for the time available.

The Times, They Are A Changing…

So in my almost quarter decade of the business, sometimes the NADA conventions reflect a certain theme, something in the industry that represents change, that overtakes many other topics. I remember the “Asian invasion” (two of them), the issue of dealerships being public entities (that’s only a little over 15 years old, by the way, for an industry that’s been around 100 years, that would be a little surprising to most folks), the “factory dealer” controversy and the “Blue Oval” experience. I’ve lived through the “.com,” “direct-to-consumer” and march of the “silicon yuppie” late the last decade, and the “program car” era of the domestic manufacturers first buying, then selling all of the daily rental car companies.

Through all this, the resiliency of the automotive dealer system, and the admirable and effective tenacity of dealers, always seems to prevail, and indeed, no matter what situation unfolds, dealers always adapt to create benefit out of chaos, advancement out of change. This year the “economy,” “green” and “emission standards” are of the highest priority, and Chinese vehicles are a hot topic. One additional event, of the highest impact was the official inauguration of the new incoming NADA Chairman, Annette Sykora. While this would seem unremarkable in most industries, this is the first time in its history that NADA has been chaired by a woman, and it’s pushing a hundred years old.

The fact is women directly buy the majority of new and used vehicles, they directly spend the majority of vehicle service dollars, yet as I walk the halls of NADA, the ratio of men to women in the retailing end of the business is still probably close to 90% men to 10% women. But this represents a positive change, as when I started in the business is it was, indeed, more like 99% to 1%.

Where I Think the Web Plays a Role

There are many reasons for the recognition and growth of the empowerment of women in the business, but one overwhelming catalyst in particular has been a level of transparency and openness that was initiated by the Internet over the last ten years or so. When I started in the business, it was common practice for a dealer to not let his salespeople know the true invoice of a vehicle, dealer customer satisfaction numbers were a closely guarded secret, and poor treatment of women and consumers in general, was notoriously commonplace in some of the more financially successful stores. With no light shining on these facts, there was very little there to motivate a change of these old practices.

About ten years ago now, the World Wide Web came along, and added a level of transparency that changed everything. Now vehicle invoices (and current consumer and factory rebates) are available to anyone who can connect up (even though for many years after this freely available information was posted, many dealers still refused to reveal individual vehicle invoice prices to salespeople…go figure). Bad “word of mouth,” and now dealer rating systems, are easily “vetted” on the Web for all to see instantaneously. And voila, the focus and treatment of women consumers that make up the vast majority of the retail automotive buying market, have improved dramatically and NADA has a woman Chairman. I don’t think any of this is coincidence or happening in a vacuum, but instead is finally ushering in a new age, where both the best and worst retailers are exposed very quickly with the visibility of virtual communities on the Web. This is taken now one step further with the advent of “social networks” that is, the formation of information exchanging virtual communities, specifically created to make available personal referral type information informally among online local and national friends.

So get the convergence here… Online communities are the most rapidly expanding Web communication medium for both individuals and marketers, and are the focus of conventional media. Cars and automotive topics have always been one of the staple topics of offline communities, when people socialize and congregate. Word of mouth referral is important to every consumer, and is the most trusted and credible method by which to pick any retailer or item (as opposed to advertising or marketing, in any form). Women buy and service the majority of motor vehicles in the US, and are, as a group, the most dissatisfied and disenfranchised with the car buying and servicing process, and are grossly underrepresented on a professional basis within the retailing end of this industry. (These two facts have something to do with each other, no doubt).

So put together all of the facts of the above, and the conclusion that a social/professional automotive online community focused on women and automotive topics would satisfy an unmet need and help to bridge the information gap for women (and all) consumers on how the business works, allowing for the type of industry retailing transparency that leads to greater purchase and servicing satisfaction. To be most effective, it would need a personal spokesperson, a woman in the business to act as a catalyst and bridge between consumers and the industry, to reach out to male and female industry personalities to explain their various functions and specialties, in a personal communication dialogue. It’s a sort of virtual town hall where the many knowledgeable customer focused individuals in the business (many at NADA right now,) are visible and can be a consumer resource for the advancement of all….

That’s the CarsDiva & CarsDiva.com

I’m proud to have announced at this year’s NADA Convention our first automotive related online community (and the only one focused on retail consumers, the rest will be industry trade networks), CarsDiva.com, the online network “By, For & About Women and the Car Business.” I’m even prouder, by the way, to introduce the CarsDiva herself, Demetra Markopoulos, who is the best new industry insider catalyst I know to be the “Martha Stewart” meets “MotorTrend” meets “MySpace” social and professional network host. It’s no exaggeration to say that among issues of the economy, green and Chinese vehicles that 2008 marks the year of the true emergence of the recognition of women as the major consumer sector that fuels the car business at NADA. I congratulate Annette Sykora for her accomplishments and in playing a large part in moving the needle forward in this regard, and hope that CarsDiva.com can push things forward as well, to the benefit of all consumers and retailers in this industry (the one I’ve always liked the most).

2008-01-22T00:15:00.000-05:00

Vol. 4 No. 1

IT’S WHAT I SUSPECTED…

On Two Very Unrelated Events –

1) The Daily Rental Numbers were Way Down for GM & Ford Last Year;

2) Guys Never Forget Their First Cars

So the year end numbers are in and it’s no surprise that Detroit is down in sales and market share significantly. What is also clear is that this is due, in no small part, to the reduction in daily rental sales that so plagued the industry for so long. Likened by Bob Lutz, GM Vice Chairman and product Czar, and others, as drug withdrawal, longer term this is good for the industry, but creates short and intermediate term horrors (plant closings, layoffs, share reduction, supplier bankruptcies, in short, what we see now and continue to see).

In fact, just today I saw Bob Lutz in an interview at the Detroit Auto Show, where, despite the blockbuster sales of some major product lines, like the Cadillac CTS and the new Malibu, the reporter emphasized the 2007 reduction in North American sales. Lutz’s response was to remind everyone that a lot of the reduction was, indeed, the result of cutting back sales to daily rental companies. Clearly, GM was the first to bight the bullet, and consequently, they look like they are in the best shape starting out 2008 (with 2007 market share down .9 of a percentage point), Ford followed soon after but had almost double a market share reduction (1.6% points), and Chrysler last year was the only one of the big three who did not significantly cut out unprofitable daily rental program cars and thus only suffered a minimal market share decline (.1 of a percentage point). But, as they say, look at them now: Chrysler just announced a 20% reduction in daily rental sales to start off 2008, along with major employee cuts, plant closings, and product contractions. The US UAW seems okay with it, but the Canadian CAW seems up a bit upset, and their contract talks start next fall, as I recall. At any rate, unlike GM & Ford, it certainly looks like Chrysler’s major drug withdrawal pain is yet to come.

…And Speaking of Pain

I think for the major daily rental car companies the major financial pain of the reduction of program buy-back vehicles has yet to be felt. It’s been delayed or massaged by the “temporary fixes” of running vehicles in the fleet longer (which is becoming obvious to daily rental car customers), and using the Internet and the latest technologies to squeeze out efficiencies in the wholesale remarketing disposal process. However, these tactics can reduce but not delay the inevitable, which is a severe increase in daily rental car operating costs. If these folks can’t significantly raise daily rental prices, over the long haul (and that looks like a hard thing to do in this current economic downturn) to absorb these cost increases (that heretofore the Detroit Manufacturers absorbed in hundreds of millions of dollars in annual write downs when these units were returned and resold), a major day of financial reckoning, I think, will be at hand.

I think there may be one more wrinkle that may exacerbate the upcoming major daily rental companies’ financial troubles, in addition to their increase in operating costs. As most of these companies’ fleets are entirely financed with big bank loans, and the bank lending crises catastrophe makes money scarce for even good credit risks, the large daily rental companies that depend on easy money may feel a double whammy coming…just my observations on the industry, we shall see what develops. One thing I think is a sure bet, that given the current credit situation, GM & Ford are glad they got rid of their daily rental companies when they did a few years ago to private equity buyers when those folks had the cash to buy, because those deals would be a lot tougher to pull of in the finance crunch we have today.

On the Lighter Side – Guys Call Ex-Girlfriends…to Reconnect with their Old Cars!

I read an article a little while ago in the Wall Street Journal, by my favorite writer, Jennifer Saranow, “The Car That Got Away,” which confirmed to me what I long suspected, that a lot of men, particularly those in the first generation that “came of age” with their own cars, will go to almost any lengths to find and reclaim the actual vehicles they first owned.

Really, it’s true, as documented in the article, men will search online classifieds, cold call junk yards, call ex-girlfriends, hire lost-car detectives (bet most folks didn’t even know such a profession existed), and when desperate, will even beg friends in law enforcement to run serial numbers in pursuit of their old cars. To help this sincerest form of auto “love sickness” lots of lost-car discussion boards and search sites have been created on the Web (see The Lost Car Registry, or the much more specialized, 428CobraJet.org, dedicated to searching for 1968-1970 Ford Mustangs with the 428 Cobra Jet engine option). It isn’t easy though, as the government didn’t standardize the VIN (Vehicle Identification Code) system until 1981, so large database vehicle history sites, like Carfax generally don’t have data for cars built before that date. Believe it or not, it’s reported that some people resort to hiring international trackers, car “private eyes,” to scour the globe, at upwards of $440 an hour, to “find the ones that got away” (really, I’d consider that a waste if, of course, it wasn’t a car we are talking about).

A “Men Only” Affliction, Sorry CarsDiva

While apparently marketing researchers have determined that people tend to form preferences for things like music and clothing during adolescence and early adulthood and these preferences stick throughout their lives, when it comes to cars, this tendency has only been found to be statistically significant among men. And it’s most prevalent among war babies and baby boomers born in the US between 1936 and 1964, men beginning to drive around the time Detroit manufacturers first began building models aimed at young people – pony cars like the Mustang and muscles cars like the Pontiac GTO.

This nostalgia thing now gives an explanation to something that has confused me. I have to tell you that I never understood the appeal of the retro cars like the Chrysler PT Cruiser or the Chevrolet HHR, but in view of this cultural phenomena, it make sense, as does the increased popularity and sales of the current Ford Mustang (one of the few bright spots in the Ford car sales stats today), or the push for the resurgence of the Chevy Camaro and the Dodge Charger.

The statistics presented in the article are very well put together and paint a very clear picture. Last year for instance, 6.8% of self-described auto collectors said they were searching for a vehicle they once owned, compared to just 1.6% in 1985, according to CNW Market Research, Inc. And on the market price index side, it’s clear that demand is clearly outstripping supply, as the collector car industry is up 60% since 2002, and is now a $25 billion dollar a year niche – that’s no small piece of change.

Alas though, one statistic proves that the odds of finding “loves labor lost” is very, very slim. In a nation with more than 244 million vehicles currently registered, and cars from 35+ years ago neither as durable nor as technologically advanced as current models, chances are most of these “object of desire” vehicles were scrapped a long time ago. The Lost Car Registry Web site has been up over five years and has 700 postings, but Keith Ingersoll, the founder, knows of only five reunions between the original vehicles and their original owners. Still, long odds would never keep a real “car guy” from continuing the search, at least the way I see it.

2007-12-31T11:03:00.000-05:00

Vol. 3 No. 29

HAPPY HOLIDAYS & HAPPY NEW YEAR!!!

Thought I’d close Out this the 2007 with a Clever Car Quiz, Brought to You with the Help of My Home Town Philadelphia Library Staff & My Home Town Paper (Now Owned Locally by Brian Tierney, Publisher and Real Estate Mogul and Car Dealer, Bruce Toll, I Might Add), “The Philadelphia Inquirer”…

No matter how you look at it, I think this has been kind of a rough year for everyone (unless maybe you are a property foreclosure lawyer), so I thought I’d close out the year with a this clever quiz about cars and the things people do in them. See how many you get right…answers at the bottom.

1. According to the Guinness Book of World Records, what is the record time for a dog to unwind a non-electric car window? (Hint: its faster than some people I know…)
a. 9.88 seconds
b. 10.01 seconds
c. 11.34 seconds
d. 12.9 seconds
e. 16 seconds

2. A famous film and TV star is now in jail, serving inmates meals as part of his jail duties. Who? (Hint: it’s ironic that the sentence is 48 days)

3. A Philadelphia TV news anchor started a vacation last Monday, somewhat early. Who? How does this relate to our topic? (Hint: the incident did not occur in Philadelphia, but in New York City)

4. We all know it is unwise, illegal, irresponsible and lethal to drive intoxicated. But Joe Cullen, assistant coach of the Detroit Lions of the National Football League, did much more than that. What did he do?

5. What famous actor and director got in so much trouble in July 2006 that the head of the Anti-Defamation League had to accept his apology?

6. In a 2006 film, an Aston Martin set a record for car stunts on film, rolling seven times in one take – and rolling into the Guinness Book of World Records. What film? (Hint: the car is a clue)

7. What do media celebs Hilary Swank, Bobby Brown, Tyler Perry and Jewel have in common?

8. The 2008 Guinness Book of World Records will include Mathew McKnight who set a car-related record near Monroeville (Pittsburgh area) in 2001. It is not a record he hopes anyone ever has to match or break. It hurt. What was it?

9. About 11,000 people a year submerge their cars in bodies of water, either by or not by design. If your car starts to sink, you should, according to the Web site Everything2, lower the windows but not try opening the doors. How come? And what is the first thing you should do?

10. What did Isadora Duncan, Albert Camus and Jayne Mansfield have in common?

Answers –

1. c. This was achieved by Striker, a border collie owned and trained by Francis V. Gadassi (Hungary). The record was set on Sept. 1, 2004, in Quebec City, Canada.

2. Kiefer Sutherland, who plays Jack Bauer in “24.” Earlier this month, he reported to the Glendale City Jail to begin a 48-day stay for DUI arrest while under probation for another DUI.

3. Alycia Lane of Philadelphia CBS 3 started her vacation Dec. 17, instead of Dec. 23 as scheduled, because of her arrest in connection with an altercation in New York for which she was arrested. She and friends were in a cab and got out of the cab at the time.

4. Cullen drove through a late-night Wendy’s drive-through while naked. Eight days later, Cullen was arrested for a DUI.

5. Mel Gibson, who allegedly hurried anti-Semitic epithets while being arrested for a DUI infraction.

6. “Casino Royale”

7. All have said that, at one time or another, they lived in their cars for some period of time.

8, According to the Guinness Book of World Records, he flew the farthest after being hit by a car. A car going 70 m.p.h. hit McKnight and launched him about 118 feet in the air. He’s okay now…

9. Water pressure from outside makes it too hard to open the doors. Opening the windows, however, allows water inside, and once the water comes inside, opening the doors will be easier. The first thing, though, is to take off your seat belt.

10. Each took a final car ride to the other side.

2007-12-19T10:32:00.000-05:00

Vol. 3 No. 28

Make No Mistake: FLEET STILL RULES

At Least for Detroit Automakers, Fleet Sales Still Represent a Make or Break (the Company) Percentage of Sales…and If Toyota Really Wants to be the #1 Automaker in the World, Fleet is Critical to them as Well…

A recent article last week in Automotive News, the weekly automotive trade newspaper that is mostly targeted to manufacturers and dealers, ran a story on page three, that very clearly identified the market power and effect fleet sales still have on the Detroit “Big Three” and even their Asian brethren these days. Program rental car sale buybacks may have been replaced by “risk” cars by Ford, GM and Chrysler, and, may have been reduced, in general, from 2006 numbers, but the first 9 month total sales results for 2007 indicate that the combination of retail sales falling farther and faster than fleet sales totals, and an increase in the commercial sales sector, served to actually increase the total percentage that fleet sales represent for most US vehicle manufacturers, especially the Detroit big three.

So here are the numbers: in the first 9 months of 2007, through September, Ford reduced fleet sales by 17.3% from the prior year, General Motors cut fleet sales by 5.7%, and Chrysler reduced fleet by 3.6%... On the other hand, Detroit’s retail sales fell by 7.4% in aggregate, so as it spins out, through September 2007:

- 31% of total Ford vehicle sales were to fleet buyers
- 30% of total Chrysler vehicle sales were to fleet buyers
- 27% of total General Motors sales were to fleet buyers

And, other manufacturers with significant fleet percentages:

- 21% of total Kia vehicle sales were to fleet buyers
- 11% of total Nissan vehicle sales were to fleet buyers
- 9% of total Toyota vehicle sales were to fleet buyers
- 3% of total Honda vehicle sales were to fleet buyers

Note: by definition, fleet is defined as any sale to an organization that buys ten or more vehicles at a time.

So Doing the Math…

Fleet sales still account for almost a third of everything Detroit sells in the US, which, to me indicates that fleet customers - commercial, rental, government sectors- large fleet buyers, small fleet buyers and everything in between, are vitally important tothe very survival of the automotive industry in the United States. Let me say that again, just because the impact of the statement, though rarely expressed in national financial publications, is so overwhelming – CONTINUED FLEET SALES SUCCESS IS VITAL FOR US AUTOMOTIVE MANUFACTURERS TO SURVIVE….

Now, I’m not saying that any manufacturer needs to do the silly, downright ruinous sub-vented guaranteed buy-back programs Detroit offered rental car companies throughout the last fifteen years or so… Those programs, in fact, were an unnatural market budget, killing creation first driven by misguided internal bureaucratic political motivations (see my blog entry on… for details), and then propagated and expanded through even more misguided union contract prescripts.This basically kept the expense of having plants running, whether or not there was any demand for vehicles. No, instead I’m talking about good old commercial, rental, and government buyers negotiating quantity vehicle multi-year purchases… If this group for some reason, in aggregate, decides one day to not “buy American,” and moves suddenly to Asian vehicle manufacturers to satisfy their transportation needs, unless Ford, GM & Chrysler can survive selling 1/3 less than their already reduced vehicle sales totals, well then, they collapse, right?

Why do I identify this, well, because I’ve been watching trends in this business for over 20 years, and I think I see a pattern here…and I also think that some misguided folks at the highest levels in the US manufacturer’s executive suites don’t realize how important their fleet clients are, and do not give them the attention they deserve as Detroit’s most important sector. So follow history and my reasoning here: in the late seventies and early eighties Detroit’s refrain to the Asian import/manufacturer threat was that, “they are good at building small cars but will never dominate the mainstream US car market.” Then later on in the eighties, it was a variation of, “they are doing well in small and midsized vehicles, but could never be taken seriously for luxury car sales by the American consumer” (I have to say the Europeans were echoing that sentiment as well). Then, somewhere around the time the eighties turned into the nineties, there was an echo of how the Asians couldn’t transplant their success using American factories and American workers (somehow that their success was due to lower labor costs alone and so not a growing threat). Then finally, after the US manufacturers all but gave up, or more accurately, abdicated the car market in exchange for dominating and making all of their money in lucrative truck sales, it was, “well the Asian’s don’t want to and never will enter the US full size truck market.” That last one was the latest refrain, still faintly echoing now while the newly introduced full-sized Toyota Tundra, made in the US, has a better than excellent chance of hitting its first year sales goal in 2007 of 200,000 units… Okay, so the Ford F-Series sales, in aggregate, will still blow the doors off of the Tundra in total sales this year, but can anyone out there be trulyoblivious to the overpowering direction of the trend?

And Speaking of Trends…

…Getting back to issue of recognizing the value of “precious” fleet customers for the Detroit’s Big Three, judging from the chart that Automotive News posted in this article, I’m not the only one that has noticed the trend this year of Honda, Nissan and Toyota in total aggregate unit sales to fleet buyers in the US through September. Partially masked by their increased market share in retail sales, when you look at these manufacturers’ total increased unit volume to fleet buyers this year, the trend is clear and not accidental. Specifically, while the Big Three reduced the aggregate total number of sales to fleet buyers, the Asians increased them significantly: Toyota with a 31% fleet sales volume increase (an additional 42,000 units in 9 months), Nissan with 67% sales volume increase (an additional 37,000 units in 9 months), and Honda, which historically has done very, very little volume to fleet buyers at all, booked a serious 118% increase in fleet sales volume (an additional 19,000 units in 9 months).

It’s true the Asian manufacturers are starting from a much smaller base of initial fleet sale units, and yes, they may simply be “picking up the slack” of the buyer’s needs given the Detroit Big Three’s cut backs, and yes this could only be a “seasonal blimp.” On the other hand, it seems to me these same “explanations” could have been (and in many cases were) used to rationalize their initial success in their US car market in the ‘80’s, or their success in the luxury segment of the market in the ‘90’s, or their current infiltration of the full size truck market this year. The difference here, of course, is thatit would certainly seem that in the condition Ford, General Motors, and Chrysler are in today, there is not much more ground they can give up before they can’t “downsize” their way out of the problem. If the Big Three lose any significant fleet volume, given the lack of growth in the retail marketplace and the challenging economic times projected over the next year or two, it could truly lead to dire consequences. If I had any influence on the top brass of the Detroit manufacturers, I’d make sure they would be focusing their attention on fleet clients like never before, as if survival itself depended on it. I think preserving the market share in this, Detroit’s last market dominant stronghold, is no less than a necessity for self preservation.

2007-12-10T08:28:00.000-05:00

Vol. 3 No. 27

“I Spy”…A Follow-Up as Recent as Today’s Headlines…

Joseph White’s “Eyes on the Road” Column in the Wall Street Journal this Week Provided a Timely Report on “Big Brother”

So last week we went from simple fleet telematics, to the new movie “Look,” to the new Facebook software Beacon, all in the name of privacy, or what doesn’t pass for it these days. This week Joe White’s “Eyes on the Road” automotive column in the Wall Street Journal provided yet another example of automotive surveillance, aptly entitled, “Here’s Looking at You, Kid.” It was so interrelated that I had to add an update blog comment on it.

It seems that there is now a new device that many insurance companies are offering, which monitors how a car is being driven. Just as with the fleet telematic devices outlined in the last blog entry, these systems use global positioning systems (GPS) to gather and transmit information about a vehicle’s location and speed, and go one step further to offer detailed driving patterns, (breaking,) and even video record the drivers and passengers. While offered as a way to keep tabs on newly licensed drivers, that is, so parents can watch their teens driving, which I guess has some merits one would think, these devices certainly aren’t limited to that function, and word is some insurance companies may even offer discounts for usage, although that’s not been adopted now by most and even any formal roll out is controversial, for privacy reasons.

You see, the economic issues relating to privacy are very real. If one of these “back seat driver” camera and monitor things is installed, controlled, or available to insurance companies, the very real worry is that insurance companies can and will begin to deny accident claims where they can, where there is evidence, through these devices, to identify negligent or gross negligent driving which lead to the accident. As Joe White aptly observes in his article, when he quotes Roger Parker, the Assistant Vice President of Consumer Driven Innovation for Allstate Corp., “Parents may want to know what their teens are up to in the car, he says, but they probably don’t want the insurance company to know or to have the power to use information to penalize them by, for instance, denying a claim based on video-recorded stupidity.”

Nevertheless, Mr. Parker says that Allstate plans to offer several different products to consumers as well as commercial accounts within a year, and, Joe White transcripts, “As insurers develop solutions to the privacy issue and the cost of hardware goes down, Mr. Parker expects on board vehicle monitoring will get big fast...We think it could be huge,” he says.

An in-car camera installed near the rear-view mirror to record unsafe "events" when a teenager drives.

Well, that may be true, and I enjoy those gecko and cavemen commercials as much as the next guy, (and just was enlightened to find out that it’s actually Talia Shire, Mrs. Rocky, that plays the analyst in cavemen commercials), but if anyone really believes that the insurance industry will push these devices on folks for the good of humanity and not as a method to save a buck and deny a claim, or that the Facebook folks introduced Beacon as a device to help their members, well, let’s just say those are probably the same people that believe in talking lizards…

And Developments on the Facebook “Beacon” Front (a ‘beacon’ is a warning, right?)

Apparently lots of others feel the same way as I do about Facebook’s Beacon, by the way, as last Wednesday it was reported that the advertising platform has, in the words of the Wall Street Journal, “prompted a user backlash so severe it has sent advertisers running.” This major controversy comes “as Facebook struggles with the huge valuation a handful of new investors have placed on the firm.” That valuation tops $15B, not too shabby considering its revenues are expected to total $150M and come mostly from Microsoft, its primary investor for a few hundred million. It seems that old Facebook went from introducing Beacon as an automatic service, then when users “recoiled” it made it into an opt-in participation. But even that was a bit deceptive, as it was learned that the Beacon spying still functions and Facebook still receives all of the users’ purchase information, even from “opt-out” users. “That has raised privacy concerns severe enough to prompt partners like Travelocity and retailer Overstock to withdraw their support. Even advertising clients fear the system is too intrusive”…now that says something about Facebook doesn’t it, when they pursue something so invasive that even the advertisers that benefit run for cover from it? When user privacy is so highly disregarded by something as “hot” with young ones as Facebook…maybe we should all be afraid… Frankly, I feel much better to know there was such backlash.

And So…

So, while intuitively when I first read the “Letter to the Editor” from Automotive Fleet Magazine that started this whole topic I was sort of skeptical of their being any privacy issue in fleet use of telematics, I now find myself skeptical in a reverse sort of way. I think maybe there are serious privacy issues afoot, perhaps not today in the way telematic information is used, but coming possibly down the road in the very near future…

2007-12-02T14:12:00.000-05:00

Vol. 3 No. 26

“I Spy”…I’m Starting to Get A Bit Concerned…I Bet Other Folks Will Be Soon As Well…

Combine Telematics/GPS Systems, with Current “Normal” Surveillance Cameras, and Innovations like “Beacon” on Facebook and Privacy Truly Does Become a Thing of the Past

This blog entry started out as a simple highlight of a “Letter to the Editor” in the September issue of Automotive Fleet Magazine that I thought raised a particularly interesting point in a new area of the law, surrounding a relative new technology, that is, telematics/GPS installation systems for fleet vehicles. These systems allow fleet managers and employers to monitor and have a detailed online digital record of the entire history of fleet vehicle’s excursions-- every stop, every time the motor is turned on or off, etc. The letter writer managed a utility fleet that had the devices installed in a pilot program and the company’s union had put in a policy grievance based on privacy issues and changes in working conditions. They basically argued that the devices could be used in vehicles but the results of monitoring could not be used for disciplinary purposes. Having no direct case law as precedent, the fleet manager was subject to the pre-arbitration ruling that stated emphatically that telematics systems cannot be used for disciplinary purposes, and that no judge or arbitrator would allow an invasion of privacy to this degree. However, it did suggest it could be used for breaches of criminal law – in short, an employee could not be taken to task because the telematics system revealed he spent the afternoon at a local bowling alley (or worse) as opposed to being “on the job,” but if the installed telematics revealed that the vehicle was used in an armed robbery, then the tracking evidence could be utilized as evidence. The writer’s question was simply if anyone else faced this issue and if this is the case in all circumstances, then the “legal brick wall” greatly reduced the benefits of installing telematics/GPS systems.

Now one of the reasons why Automotive Fleet Magazine is the “bible of the fleet industry” and why I think the “Letters to the Editor” section is way more informative than similar sections in other magazines, is because Ed Bobit, Mike Antich, and the rest of the crew do an excellent job to investigate and get the best answer/responses for good topical issues and questions. This was indeed the case once again, when this reader’s query was answered in print by Ann P. Fourney, attorney for the automotive issue focused law firm of Hudson Cook, LLP in Washington, D.C., where she responded that the cited “grievance by the union in question may be based on a collective bargaining agreement management and the union,” and, “if so, the issues involving work conditions will be resolved in accordance with the collective bargaining agreement and applicable labor laws,” “However, these labor relations issues do not implicate federal privacy laws.” Fourney went on to say that “Generally speaking, fleet-oriented telematics/GPS products, used in accordance with the vendor’s instructions (and with the notice provided to the employee) do not violate privacy laws,” and “In fact, a properly designed telematics/GPS product reflects a careful balance between an employee’s right to privacy and an employer’s legitimate need for the information.”

So That Was It, The Issue, the Question, and the Answer--Until I Picked Up a Newspaper This Week…

So simply, there was the concern and the answer, providing a brief but information filled topic that I wanted to provide more exposure to in this blog. I thought it was interesting both from a fleet and legal perspective (because of my background I’m one of those strange folks that looks for the intersection of both topics), and that was the end of that, until I was reminded of the issue this week, in two distinctly different articles in Wednesday’s issue of the Wall Street Journal (November 28, 2007). They were different articles but each dealt with the what is now the perceived issue of privacy, and when looked on together from a broader perspective, and combined with the “telematics at work” issue, really makes one think about how personal privacy is fast becoming a myth propagated by the uninformed.

The first article that I saw on the topic in the WSJ last Wednesday was in the editorial section, the “Business World” article written by long time Journal editorial writer, Holman W. Jenkins, Jr., entitled, “I Spy.” In it he highlights a new movie, “Look,” co-produced by Barry Schuler, about surveillance. Interestingly enough when combined with the topic of the second article I’ll cite from the paper that day, Jenkins’ says that Schuler began thinking about the topic when he was CEO of AOL, and "the subpoenas began arriving for access to member’s emails." It also said that “Adam Rifkin, the film’s director and screenwriter…had a similar epiphany: He was nailed by a traffic camera for running a red light.”

The film “Look” is a “loose-hanging collection of intersecting plotlines…whose stories are seen entirely from the perspective of surveillance cameras at ATM machines, high school parking lots, a department store stockroom, etc.” (Hey, it occurs to me they could have included dealership “F & I” closing rooms, as lots of those have video recording cameras running as well these days). “The characters are mostly unaware that their behavior and misbehavior is being recorded. The audience isn’t. Hence the film’s ingenious charm.” (the film apparently sports an “R” rating and was lucky to get off that easy).

The article goes on to state that Schuler’s research found that most of the nation’s 30 million closed-circuit private surveillance cameras aren’t monitored by security pros (surprise?), but manned by minimum wage teenagers, the very same folks who like to make unauthorized highlight reels and post them on YouTube… You get the drift here folks…the movie is fiction but the underlying situation is very real – this is not a movie of what may happen in the future, this is happening right now, all the time, in lots of places.

What is coming in the very near future, however, is of even more concern. “The surveillance cameras of the future will be networked – linked to each other and computers capable of face recognition and other kinds of pattern recognition, and thus able to extract information about who and what the camera is seeing.” As is quoted, “In a much-noted October speech, Donald Kerr, who serves as No. 2 overseeing the nation’s intelligence agencies, laid out a hard truth – “in our interconnected and wireless world,” he said, “anonymity- or the appearance of anonymity – is quickly becoming a thing of the past..And our only hope for “privacy” (meaning some degree of control over who has access to private information), he argued, is by trusting government.”

Okay, so is anyone concerned yet?

If not, let me move on to the final article in the Wall Street Journal, that ran the very same day, in the front page of the “Marketplace” section, the “Portals” column by Vauhini Vara, entitled, “Just How Much Do We Want to Share On Social Networks.” In this article a new automatic “service” on the social networking site Facebook is highlighted, called Beacon, which, get this, automatically follows its members around the Internet and reports back to all listed friends all of that member’s Web based transactions ( all purchases: clothes, movie tickets, books, online films etc.) – by the way, apparently a Facebook member doesn’t get a choice in this if you join this social network, which is why, I think business/professional social network sites are sorely needed that adopt the best business networking traits of social networks but thatprotect things like privacy and aren’t geared towards kids, even college kids, that frankly don’t know any better than to accept these “innovations” for the sake of feigned “closeness” with hundreds of online “friends,” any more than they yet have not gotten tired of “thrown sheep”or “pokes” from “friends.”

If you buy something from an online site that has signed up with Beacon, a note is sent to your Facebook profile automatically, and in an area of your friends Facebook account under “news feeds” which gives them updates on friends activities…and of course, an ad for the purchase site can accompany the news feed note. Its reported, “Fandango (the movie ticketing site), Blockbuster and Overstock.com are among the few dozen commercial sites on board already” – why wouldn’t every online vendor sign up, as no compensation is paid to you for the broadcast of your purchase behavior (as the article says, you get nothing from the transaction, “except the satisfaction of having yet another way to broadcast your every move to every friend”).

Of course you get to “opt out” of this invasive device, but as the article says, that isn’t easy… the box that appears at your initial item purchase time on the corner of your computer screen stays there for all of 30 seconds, saying, for instance, “Fandango is sending this to your Facebook profile: Vauhini bought No Country for Old Men on Fandango.” Then, on your Facebook account, there is a similar notice at the top of the page, but to stop the broadcast to all friends takes four clicks, while one click of “ok” forever pastes your purchase history to all of your listed friends. “Beacon asks Facebook users to make ever more-invasive trades for the sake of an ever more superficial sense of closeness.”

I have to add my own observation here, that is, blatant privacy invasion devices like these (unlike the surveillance cameras or telematic/GPS devices noted above that have a good underlying security justification), in my opinion, will ultimately identify and relegate Facebook to be an inexperienced “kids play world” forever, just as MySpace is today – 35% of the audience is under 18 years old and 15% are parents trying to watch this 35%. And then you add to this percentage the audience that wants to sell to this teen mentality buying group, entertainers, clubs and the like, and I’m not convinced there are too many full grown adults on these networks, or that the their adult membership is growing significantly. As one well known VC partner stated (an investor in a product servicing one of these sites I might add), "if you are over 40 and on either of these social networks, well, you are kind of creepy…"

In any event, I think experienced business folks wouldn’t put up with exploitive “innovations” like “Beacon” for 30 seconds…no self respecting networking site, that catered to adult users, would allow its use, let alone promote Beacon as a service. As

Adam Nash, Senior Director of Product for LinkedIn.com said when I heard him speak in Philadelphia at the Entrepreneurs Forum recently, you would never see LinkedIn.com allowing “widget” software that allowed the viral sending of virtual “sheep throwing,” or “zombie pirate bighting” messages, apparently the two highest volume application software widgets circulating on Facebook today. As identified, LinkedIn is geared towards adult professionals, who, if exposed to such things even once, would sign off and never return.

In my opinion, it’s time that social networking online get out of the “kiddy playground” that MySpace and Facebook have created, and use the advanced technology for networking available to create business networks specialized in various career disciplines. I think innovations on Facebook like “Beacon” only reinforce this idea, and LinkedIn has done a lot to move things in the right direction, but there are still a lot more, business focused networks yet to be created.

So Back to the Issue at Hand…In Summation…

So what started out to be a rather innocuous blog entry highlighting some useful information that was in a recent “Letters to the Editor” area of Automotive Fleet Magazine about the (again rather innocuous) use of telematics/GPS in fleet vehicles, turned out to have some larger ramifications, when put in the broader perspective of surveillance, as the topic and message outlined in the editorial section of a recent Wall Street Journal reviewing the recent film, “Look,” then combined with the article in the very same issue dealing with the reality of online surveillance software on the second most popular social networking site on the Web. My observations/conclusions to all of this:

a) None of these topics involve future surveillance, all this stuff – telematics, public videos monitored by non-qualified civilians, Internet tracking surveillance is all proliferating right now

b) To the extent adult business people can provide limits they do, i.e. the actual discussion in Automotive Fleet of the issues present at the very beginning of the mainstream use of telematics

c) To the extent inexperienced consumers/young people are exposed to online surveillance, sensitivities are not so heightened, so indeed, there are no limits to date and widget makers such as Beacon are free to do what they like; frankly, I’d be more concerned about an online service tracking and broadcasting my every Internet purchase, than I would my employer tracking my employer provided vehicle during business hours, but I’ve yet to see any serious consumer/legal backlash on such an Internet surveillance

d) Perhaps the only protection we have in this increasingly interconnected, surveillance filled world is, as the Journal describes it, “normal democratic pushback” to help “curb the excesses by questioning the competence and motives of government” as has occurred in Britain, probably the most “watched” society. Or as it says, “the best hope for taming the new technology is simply voters’ learning curve” and films like “Look” serve as “a kind of public service announcement.” But…

e) How long is this learning curve, if the youngest adult demographically skewed Web sites can actively and commercially promote and expand privacy damming surveillance widgets online and be greeted not with outrage or even suspicion, but with an almost naïve enthusiasm? In fact, given that this is the case, we provide a huge economic incentive for these firms to become more skilled at surveillance (the participants in Facebook don’t even get a cut of the revenue their purchase surveillance generates) and equally skilled at glossing over “opt in” provisions.

What do you think?

2007-11-20T10:02:00.000-05:00

Vol. 3 No. 25

The JD Power Automotive Internet Roundtable 2007

Again One of the Best Events of its Kind, it Happened in Las Vegas October 17-19

A few other things came up between then and now, so I’m a little late in writing about the annual JD Power Automotive Internet Roundtable which happened about this time last month, but that in no way lessons the importance or impact of this “best of in class” event. This is the third annual JD Power Roundtable of its kind, which concentrates on new developments in online marketing and commerce as they relate to manufacturers, retailers and vendors, and once again my old friend Charlie Vogelheim, the resident automotive master of ceremonies extraordinaire (and officially the Vice President, Automotive Development, of J.D. Power and Associates), did an incredible job, somehow topping even last year’s event, in terms of content, relevance and an outstanding line up of speakers.

Those of you who read this blog know of Charlie’s talent for entertaining an audience, so I’ll stick to relaying a few highlights of the program, and my interpretation of the reactions to it and, from what I can tell, the new developments that lie ahead for Internet innovations in the automotive world.

The program was organized around a half a dozen or so general sessions for the entire audience, with keynote speakers including Curt Viebranz, President, AOL Platform A and Gary Marcotte, the Senior VP eCommerce for AutoNation, and then some breakout sessions, mostly industry panel discussions divided into two tracks occurring simultaneously – one for automotive retailers and the other for automotive marketers in general. I obviously couldn’t attend every session even if I had been there the whole time, and due to some schedule conflicts I arrived there late the morning of the second day (getting to Vegas late, that is unusual for me, I usually like to come early and stay late…), but I attended enough to sense a couple of reoccurring themes from many of the varied speakers and panelist, which included senior people from Yahoo! Autos, Autobytel, General Motors, Volvo, Cars.com, AutoTrader, Ford, Chrysler, Nisson, BMW, etc.

The Bottom Line

So, distilled in some bullet points (for those who suggest I may be too verbose at times), are my conclusions drawn from the excellent program and presentations at the JD Power Automotive Internet Roundtable:

If the first generation automotive retailing Internet revolution was ushered in through third party, lead generation sites, the current one clearly revolves around organic and keyword search. If your average dealer, let alone manufacturer and dealer ad groups, isn’t an expert or doesn’t have a cadre of advisors working this system he or she will be at a severe disadvantage to those dealers down the street that do master this discipline.

In relation to the above, local search for dealers is the place to be, and results in refining traffic will far outstrip broad based initiatives.

New advancements in mobile text based messages, targeted demographic profiles, email initiatives (for current customer retention), all will play a significant role in prospecting and keeping customers in the future.

On the Web video is king, it’s the new method of communication, get involved tell your message, list your cars, pattern your website to accommodate video media or risk getting passed over for those that do.

Social networks will migrate into specific affinity groups, note the transformation of Autobytel from primarily a lead generation site into a full blown social network, this evolution is consistent with the prognostications in David Silver’s book (see blog entry Vol. 3 No. 16, Sept. 16, 2007).

Word of mouth has always been the most effective form of prospect lead generation for car dealers (got that from JD Power’s own Chris Denove and Jamie Power’s great book, “Satisfaction: How Every Great Company Listens to the Voice of the Customer”), this will soon translate on the Web, and dealers will as easily and visibly be ranked and reviewed by consumers as books are on Amazon.

A Special Observation on the Last Bullet Point

In my opinion, this last development will usher in monumental changes in how cars are sold. To be quite honest and lay it bare, there are two types of successful car dealers in this world, one actually satisfies their customers and has good service, and the other, far more prevalent still, are the ones, despite what they say in broad based advertising, base their whole operation on “raping and pillaging” every walk-in prospect or “up” as we call it (in sales or service) and try to wring every last dollar out of them, albeit with a smile, ultimate satisfaction be dammed. How does the latter variety maintain a customer base, you might ask, well, to a large degree they depend on a) mass advertising, as in densely populated areas they can advertise extensively and always have new (or almost new) prospects entering the funnel, b) a not very fluid “word of mouth” network, as the majority of those consumer that are taken don’t really want to advertise that fact to friends and neighbors on a face to face basis.

The Manufacturers or Conventional Media Wouldn’t Pioneer Dealer Reviews for Fear of “Reprisals,” but Consumers on the Internet Will…

I’ll tell one more little secret here, as it’s just between “friends.” Manufacturers, for as long as I’ve been in the business, proclaim to hate the “rape and pillage” type of dealer to the external world (who wouldn’t), but as these folks tend to sell the most cars and have a lot of the highly profitable metro stores on which these manufacturers depend, the OEM’s quietly, internally embrace these folks, the masters of the “up sell,” and actually reward them financially with extra stair step rebates, special contest trips, etc. It’s a fact that, as a dealer, the top retail sales contest prizes offered by the manufacturer where always high end $15k+ valued cruises on the QE2, while the top “CSI” (Customer Satisfaction Index score evaluations) were recognized, in total, with a once a year banquet dinner at a local restaurant and a plaque – so, putting their money where their mouth is, you tell me that the manufacturers really communicate…

Also a fact, some of the most “in demand” automotive product, Toyota, Honda etc, have the worst dealer satisfaction scores in the business (just ask JD Power). These dealers simply don’t have to be nice, as they know in most cases, regardless of how they treat their customers, they have a somewhat captive market, since those franchises are not “over dealered” the way Detroit brand are, the consumer has less of a convenient choice in picking an alternate same make dealer for the brand.

In any event, the transparency of the Internet will do what the conventional media, to date, has not ventured to do…and there is no secret as to why conventional ad supported media wouldn’t pioneer this…remember, automotive advertisers have historically represented the number one revenue source for print and broadcast media, so this same media is hardly going to venture into mass populist dealer review type communication. Ironically, the facts relayed above explain why the worst “CSI” dealers are often, and indeed, must be, the highest mass advertisers (they need to generate new traffic, they can’t count on repeat buyers).

Transparency Changes Everything

By opening up the consumer review market to rank and review dealers, not just to specific vehicle make and models (old hat now on the Web), those “high pressure” stores will be “outed” much more easily. The disgruntled customer can easily and indirectly vent their frustration, and, alternately, the potential car shopper has easy access to broad based “word of mouth” recommendations. This, more than any manufacturer CSI study carrot/stick, will change automotive retailing for the better, probably one of the biggest changes wrought by the Internet to date, in my opinion.

Are there any opinions out there on this? Do you think it’s a good idea to see more dealer based review programs easily accessible on the Web? Let me know your thoughts, either in public comments or privately at carguy@driveitaway.com.

2007-11-09T15:27:00.000-05:00

Vol. 3 No. 24

The CarsDiva Starts a Blog

So a New Era in Automotive Journalism has Arrived…The CarsDiva Blog is Launched…

Finally, something that I thought was a good idea way back last winter when she “guest wrote” a blog entry of mine, Demetra Markopoulos, my esteemed colleague, friend (at least she was before it took me so long to announce her blog, that in truth, was launched over a week ago), and the appointed CarsDiva, has launched her very own industry blog at blog.carsdiva.com.

Taking a different tack than my fleet/remarketing/event obsessed travel log, Demetra is instead delving into the much more interesting, and at times maybe controversial, topic of what it is like to be an industry insider in the car business…from a woman’s perspective. She looks to reveal those things, industry practices in automotive sales and marketing, that may, intentionally or not, tend to confuse or alienate women as consumers, business people and “car people” (I was going to use the term “car guys” but that may indeed be one of those alienating things of which I refer).

She also welcomes anyone’s questions, comments, concerns or troubles with any area of the car business. Having immersed herself in this crazy environment for the last few years, I can tell you she is as good a “car guy” (there I go again) as anyone I’ve met, and has made quite a few friends and contacts that she can call on to help, in every sector, up and down the food chain, along the way.

In short, if anyone can be a “no holds barred” “Dear Abby” in this business, she’s fully equipped to handle it.

...And To Mark the Occasion, a Surprise

Okay, so in honor of this monumental occasion (and to make up for the fact that I’m a almost two weeks late in writing this blog entry marking this launch), I have hereby created and have for sale the official, one and only, copyrighted and patent pending, CarsDiva.com real, live 41 cent postage stamp, as seen below…

Really, for real - just click through the CarsDiva stamp above and you can order a set for yourself - stick them on letters or any US correspondence, and not only will the US postal service deliver your mail, but your recipient will have lot better looking picture to eye through the post mark than your typical ex-president or famous (…sorry Ms. Markopoulos, I meant to say “other” famous) icons. Not to mention the more fun you will have in affixing it (I must be a reformed “car guy”; I said that whole lot more tactfully than I could have…).

At any rate, here’s to you CarsDiva (or CarsDiva.com), I know that this will be the first of many successful Web “firsts” you will launch for cars & women…

2007-11-01T09:35:00.000-05:00

Vol. 3 No. 23

A Long, Long Time Ago, in a City Far, Far Away…

Okay, so it Really Wasn’t All that Long Ago, and Kansas City Really Isn’t that Far…

Back over a decade ago, when I was conducting the small business targeted commercial sales/fleet program for Ford Motor Company, originally titled the Ford Mainstreet Program, but now called Business Preferred Network, during a multi-day seminar in Kansas City, I met for the first time Bill Raynor, one of the brightest, most energetic folks to participate. It was clear Bill caught on to the whole fleet sales thing, as I think he was a pro before he ever signed up for the program (although I hope I added a new angle or two). Since he is in Kansas City, and I’m in Philadelphia (when I’m not on a plane somewhere else), we didn’t run into each other often, just occasionally, at a NAFA event here or there.

So I was very pleased when I got an e-mail note from him recently and he let me know he just joined Piemonte National Fleet in Chicago (but is still living in Overland Park, Kansas). Piemonte (with Russ Cass and the crew) has been one of the best national fleet dealers in the country, really one of the “icon” dealers in the fleet business, since before I started in the industry (you know that’s a long time), and Bill is one of the best dealer fleet guys out there, so it seems a perfect match.

Bill Raynor

Congratulations Bill, I look forward to running into you at a few more national fleet gatherings in the coming year.

2007-10-29T06:18:00.000-05:00

Vol. 3 No. 22

A) A Letter to the Editor of Automotive Fleet Magazine…

B) A Response from the Editor & Publisher of Automotive Fleet Magazine…

and,

C) A Response, to the Response, From Yours Truly…

Many Folks Feel Strongly About this Topic, Including Me…

I rarely write “Letters to the Editor” for the print publications I read, and I have never written a response to an Editor & Publisher, which is, indeed, itself a response to a “Letter to the Editor,” however, issues brought out in this particular dialogue hit close to home in many ways, for this automotive Internet “pioneer.”

In all an honesty, calling “a spade a spade” as it’s described below, I’ve run into the bureaucratic road block of professional fleet managers only doing “what their leasing company tells them” way more often than I have the “enlightened” fleet manager type who seems to think for him or herself on a matter…and, of course, as mentioned in the June letter, this problem I have experienced is exacerbated by the fact that our business is in remarketing off-fleet vehicles (“That equates to not a lot of knowledge about new vehicle front money and practically nothing about how the used vehicle market works – an area that far surpasses the front-end money left on the table”).

As Mr. Bobit determines, there are a whole lot of exceptions to this type of “non-thinking” fleet manager, and I’m privileged to know many of them, but, unfortunately, there are whole lot of the type outlined in “Anonymous’” June 2007 letter as well (and I’ve met many of them too). I don’t think this is necessarily an indictment on one sector of one industry though, as I say in my response, it is more an example of the “cover your butt” syndrome that has been prevalent in large corporate and government bureaucracy since, I think there have been bureaucracies. However, I have to say after 20 some years in the car business, with some exposure in other industries as well, that the US motor vehicle institutions and the management of the fleets that run them, seem the most bureaucratic and the last to adopt any changes or advances in technology and new processes. As was observed by EJ Lawless in his comments in this blog a while back (and observed in his own at blog at Auto Industry Startups http://autoventures.wordpress.com/), there is a dearth of tech type start-ups in the car business for very good reason…its rough going out there sailing against this type of anti-change, anti-innovation bureaucratic regressive attitude that permeates the atmosphere in this industry more than most others.

Does it impede innovation? Most likely. Is this why it exaggerates effects of such things as the “Tipping Point” phenomena or “herd mentality” in the car business (notice the sudden ubiquitous attention to “green” vehicles for instance), perhaps. Is it a big pain in the butt (and a cause for severe depression at times) for entrepreneurial types who spearhead new technology and processes to tackle old problems – that I can say, definitely, it is…but what can you do?

It was an old Japanese proverb, I think, that defined success as getting knocked down ten times and getting up eleven; or, closer to the ‘hood, as my fictional neighbor in Philly Rocky Balboa put it, “It ain’t how hard ya hit, it’s how hard you can get hit and still keep moving forward.”

At any rate, here is the dialogue, that, at least in my opinion is worth a second a look and raises a topic that is deserving of a lot of thought for anyone involved in this sector of the car business (as it did with Mr. Bobit one of, if not the, most knowledgeable human beings on the planet on these issues).

Letter to Automotive Fleet
June 2007 issue

When talking with some of my fleet manager peers, I need to call a spade a spade. In 20 years of fleet management, I have watched how these peers operate. While there are indeed a few “aces,” you can practically count them on one hand. Over the years, I’ve been to dozens of conferences, local NAFA meetings, and new-car showings. I’ve talked to literally multitudes of “fleet managers” and most sound like broken records. Ask them a question and their answer is: I’ll have to check with my leasing company and see what they say about that.” Most of the ones whom I perceived as true fleet pros run owned fleets and don’t have a leasing company.

My conclusion is that most so called fleet managers don’t know a whole lot, except what “their leasing company tells them.” That equates to not a lot of knowledge about new vehicle front money and practically nothing about how the used vehicle market works – an area that far surpasses the front-end money left on the table.

Over the years I’ve heard these peers voice the same complaint over and over, namely: “Senior management doesn’t give me any respect.” Well, respect is earned, not given for free. The only way I get “respect” is to politely ram the cost factor down senior management’s throats. How can you hope to do that if all you know is what “your leasing company tells you?”

Anonymous

Editorial Response from Ed Bobit, Editor and Publisher of Automotive Fleet, entitled, “There’s Serious Cause for Concern!”
September 2007 Issue

Ever since this letter to our editor ran in our June AF issue, it has rankled the heck out of me. Not because it’s anonymous, not because it isn’t necessarily a legitimate observation, but more because it’s an indictment of our industry.

I take this assessment of fleet managers in general (always a dangerous ploy) personally. Why, you might ask? Well, we know the writer, and it’s a pro we all respect with years of experience successfully running a good-sized fleet.

We also know that we’ve been researching and writing feature articles every month for more than 46 years keeping the nation’s fleet managers informed with news and helpful solutions to their challenges. We know that the National Association of Fleet Managers’ (NAFA) Fleet Management Institute (FMI) and educational resource center, like our’s, provide many answers to their members.

So, after all of these years, and if there’s a shred of truth in what the letter writer has said, it’s a sad state of affairs. It’s not as if our editors and NAFA aren’t trying; the educational tools are in place. We need to take a hard look at the individual and his or her environment, and root out the lack of initiative.

Why, you ask? Because I know hundreds of knowledgeable fleet managers; it’s not a handful. Because there’s nothing wrong if you depend on an expert at your leasing company. They’re loaded with them (experts of all kinds who answer tough questions daily).

The base problem is that some people with little business experience are placed in the fleet manager function because executive management doesn’t understand the value of that position. Top management may be blind to the possible costs that can be charged needlessly or the possible savings that can be attained through experience and professionalism.

This letter prompted me to devote a lot of thought on the topic. Finally, in late July, I forwarded a detailed “Fleet Manager Recognition Program” presentation to NAFA’s Board for consideration. It outlined a definitive plan for elevating respect for fleet managers, identifying their values, directing this fact to corporate executive management by working together with our resources.

All of us should hope it flies. It’ll help, believe me.

My Letter to Editorial Response from Ed Bobit, Editor and Publisher of Automotive Fleet
Written, October 2007

I just read your editorial in the latest issue of Automotive Fleet (Sept 2007),”There’s Serious Cause for Concern!” and, as it turns out, the same issue/letter “rankled” me as well, as the topic kind of “hits home.” So, you know me, never shy to put my two cents in (though usually unsolicited), at the risk boring you, I thought I would give you below, a kind of letter to the “editorial” (if there is such a category of comment) with an additional viewpoint.

In short, I do think there is some merit to the argument in the June 2007 letter you cite, and it does make one bristle a bit, for a lot reasons. I also think that, to the extent it is an industry education problem, that is, a lack of knowledge or recognition, your research and writing, and all of the various activities of Bobit Media, and organizations like FMI, AFLA go a long way to eliminate the industry specific “cause” for the problem, as does a “Fleet Manager Recognition Program” initiative you identify.

I suggest however, although the letter reads as an indictment on a specific industry and job function/talent, I actually think it has a broader application. In short, substitute the phrase “I’ll have to check with my leasing company” with “I’ll have to check with my manager” (or committee, or partners, etc.) and I think the endemic nature of this excuse for individual initiative within a large institutional entity becomes more apparent. I think in many cases what is lacking is not knowledge or intelligence on a specific topic, or even job recognition to some extent, but the individual internal fortitude to “make waves” or champion any change that could have risk, and indeed, most significant innovations or change initiatives within an institution involve some form of risk.

Those who are old enough (and I’m past that point now I’m sorry to say), remember that for many, many years technology innovation was restrained to some degree in many large companies from the phrase/reality expressed in the saying, “no one ever gets fired for buying IBM” so no other newly introduced vendors or processes were ever seriously considered beyond the “status quo” (of course change eventually comes, but there is no denying this type of roadblock). I think maybe what is happening here to some degree is a variation, “no one ever gets fired for doing what the leasing company tells them to do,” feigned ignorance is the safest course of action (at worse, I guess, if things go bad the leasing company vendor gets switched).

I can’t help but refer in the fleet business to a particular residual value guidebook that was used for years (up until very recently) as the overriding preferred industry benchmark, that is, many years past the point when everyone (including those using it) knew that it had nothing close to actual vehicle resale values – filled with gross inaccuracies it became a benchmark by default, only because everyone used (and had been using) it (kind of like Paris Hilton being famous for simply being famous…self fulfilling group inanity?). Talk about an example of a systemic fear of change…

In any event, I don’t think by any means this is wholly a fleet industry problem. From my perspective in looking at many different industries and institutions (law, finance, telecom), it seems to me that while the specific lyrics might be different, the tune is the same – now more than ever, at least it seems to me, there is an almost paranoid avoidance of anyone within larger institutions to take individual responsibility to initiate a change in procedures, policy, etc, even ones that have a high probability to improve things. It’s not necessarily that folks are ignorant as to the underlying topic or benefits, it’s that if any new policy or procedure or product involves the slightest risk or downside, it’s rejected without consideration of the upside – note: there may be a very good reason for this from the individual’s perspective, as in many places the old tag line “a success has a thousand fathers, and failure is an orphan” holds true. It seems as if people in larger institutions avoid taking responsibility to act as change agents or innovators, unless the institutional culture itself encourages and rewards this conduct (some very good business books have been written which identify this problem and focus on solution). To the extent that this is the case though, the problem is more a cultural one within each institution, and even the availability of all of the educational resources currently offered won’t move the needle as much as one would think they should, frustrating as it is for all parties.

John F. Possumato

2007-10-25T20:16:00.000-05:00

Vol. 3 No. 21

The 50 Worst Cars of All Time…

The Headline Alone Intrigued me…

So at the risk of citing another publication citing yet another publication, an article in a recent issue of Automotive News caught my eye, which, in turn, highlighted Pulitzer Price-winning auto writer Dan Neil’s recent article in Time Magazine which noted the 50th anniversary of the Edsel by identifying what, to him, were the 50 “worst cars of all time.” So now having given proper approbation, without you having to flip through the fifty Web pages of the article, here are the best of worst –

1899-1939

1899 Horsey Horseless (at least it would be fun to bring back the name)
1909 Ford Model T
1911 Overland OctoAuto (you had to see this one)

1913 Scripps-Booth Bi-Autogo
1920 Briggs and Stratton Flyer
1933 Fuller Dymaxion
1934 Chrysler/Desoto Airflow

1940-1959
1949 Crosley Hotshot
1956 Renault Dauphine
1957 King Midget Model III (and you thought the “mini” was a an innovation)

1957 Waterman Aerobile
1958 Ford Edsel
1958 Lotus Elite
1958 MGA Twin Cam
1958 Zunndapp Janus
(no doubt about it 1958 was a bumper year for bad cars)

1960-1974
1961 Amphicar
1961 Corvair (Ralph Nader loved this one)
1966 Peel Trident
1970 AMC Gremlin
1970 Triumph Stag
1971 Chrysler Imperial LeBaron Two-Door Hardtop
1971 Ford Pinto
1974 Jaguar XK-E V12 Series III

1975-1989
1975 Bricklin SV1
1975 Morgan Plus 8 Propane
1975 Triumph TR7
1975 Trabant
1976 Aston Martin Lagonda
1976 Chevy Chevette
1978 AMC Pacer
1980 Corvette 305 "California"
1980 Ferrari Mondial 8 (Ferrari made this list, who would have thought it?)
1981 Cadillac Fleetwood V-8-6-4
1981 De Lorean DMC-12
1982 Cadillac Cimarron
1982 Camaro Iron Duke
1984 Maserati Biturbo ('"Biturbo" is, of course, Italian for "expensive junk."')
1985 Mosler Consulier GTP
1985 Yugo GV
1986 Lamborghini LM002

1990-Present
1995 Ford Explorer
1997 GM EV1
1997 Plymouth Prowler
1998 Fiat Multipla
2000 Ford Excursion
2001 Jaguar X-Type
2001 Pontiac Aztek
2002 BMW 7-series
2003 Hummer H2
2004 Chevy SSR

2007-10-15T18:51:00.000-05:00

Vol. 3 No. 20

The Frankfurt Auto Show, September 13-23, 2007

In Frankfurt, Germany, the 62nd International (IAA) Motor Show, so of course I didn’t get to go, but maybe one day…

The Frankfurt Auto Show last month is one of the premier auto shows on the planet, and I wasn’t there, but I read a whole lot about the contrasting display of power performance vehicles and “green” vehicle introductions, niche concept vehicle previews, and, in short, everything you’d ever want if you were a car fanatic.

I know BMW introduced their concept X6, Ford introduced their Verve concept, and Lamborghini even premiered their new model, called “The Reventon” that sells for 1 million Euros…that’s Euro’s folks, as in $1.4M American…

Regardless of all that, the real reason I would have given my last frequent flyer mile to have been there was to see the new production Jaguar up close and personal, the Jaguar XF (the vehicle that is replacing S Type, but from what I hear, is light years ahead of the S in styling, performance and luxury). It won’t be on sale here in the States until next spring, so I guess I’ll have to be satisfied with a picture or two until then….

2007-10-10T14:20:00.000-05:00

Vol. 3 No. 19

Automotive Fleet & Leasing Association (AFLA) 2007 Annual Meeting and Conference

Turning Change into Opportunity - Part II

After Mike Rayburn’s unique song combinations, it was back to serious topics Thursday afternoon (September 6th), at the AFLA conference, with a presentation by Paul Traub from Chrysler, LLC (note: no longer Daimler Chrysler…), entitled “How the Changing Landscape Will Influence Fleet Sales” and followed by a presentation, “Turning the Change of Globalization into an Opportunity” by Matt Dyer, of LeasePlan International. That wrapped up a very information filled day, and, as you can tell from the titles, the topics where of the “advanced” class, big picture scope.

Down to Business

Mike Conroy turns the "President's" gavel over to Elsie Lucie

The next day started with the annual AFLA business meeting announcing election results, and I’m pleased to officially announce my old friend, Elsie Lucie, from Estee Lauder, as the incoming President of the Automotive Fleet & Leasing Association. Elsie succeeds Mark Conroy, from Union Leasing, now the outgoing President and the Past President Member of the Board of Directors. Just prior to this Elsie served as the Executive Vice President, and along with Mike Antich from Automotive Fleet Magazine, as Co-Chair of the Conference Committee. Now Mike has moved up to Executive Vice President of AFLA, and another old (Philly local) friend of mine, Tom Donato from ARI, has been elected Vice President. In addition, Deb Watkins from PHH has been elected as Secretary of the organization, joining Debbie Mize from Hallmark Cards, as Treasury. Also, elected to the Board are: Ron Shoemaker (Director, Remarketers), Brian Farrar (Director, Dealers), Kent Boskovich (Director, Lessors) and Dick Malcom (Director at Large). They join current Board Members, Pat Dougherty (Director, Allied), Jim McCarthy (Director, Fleet) and Lori Rasmussen (Director at Large), and, of course, Ed Bobit, Director Emeritus (and one of the original founders of AFLA). Congratulations one and all.

The first presentation of Friday morning was one of the best I have ever seen a “factory guy” conduct. Actually, the fact is, Ray Fisher, the presenter, is no longer with Chrysler Corporation (or Daimler Chrysler, or Chrysler, LLC, whatever the proper name is today). But Ray had been with Chrysler for such a long time, and, indeed, the last time I saw him present at AFLA he was with Chrysler, so I think, even though he is now the President of Donlen Corporation, he still qualifies as a “factory guy.” Indeed, his presentation, “Changing Gears: Factory to Fleet Management” was about this very transition, from operating as key guy in a very large multi-national company, to being the top guy in smaller organization. In truth, Ray has a natural gift for addressing a group in his now semi-famous, “that’s good/that’s bad” story time approach, and I always look forward to his presentations (“Mrs. America” sash and all).

Next on the agenda was a presentation on “Hybrid Economics” by Mike Love from Toyota Motor Sales, as timely a topic as you can find these days, and then a presentation from my friend Tom Webb, from Manheim Auctions entitled, “Forecasting Resale Value Trends” – a topic that is always timely for me… I still think the next evolution to the Maheim Used Vehicle Value Index that Tom created should be the ability to “hedge” with options or forward contracts the underlying values, like any other index driven derivative; if I can now “hedge” (fancy way of saying “bet”) on the oversupply of housing inventory in various US cities (and other arcane things) through options or futures contracts in NY (I can, it’s a new security that began trading a little while ago, it only trades 30 or so contracts a day I hear, but…), then why couldn’t a trading security be issued against Tom’s very well grounded index, one that could be used as a hedge against unforeseen pre-owned vehicle value changes. In my opinion an index like the one created by Tom lays the foundation for a sophisticated hedge/trading security to be created…I wonder why no one has, to date.

Driving as Cell Phones Don’t Mix…

The final presentation for the afternoon, and the conference, was, at least for me, a real thought provoker. Lee Whitehead, Director DCC State Program Administration of the National Safety Council, addressed the group with a presentation entitled, “Driver Distraction: The Ticking Time Bomb.” Let me run off a few statistics that Lee presented, and I think you will see why her presentation raises more than a few serious issues:

>100,000,000 drivers engage in the concurrent use of a cell phone while operating a motor vehicle
Inattention is involved in 78% of all observed crashes and 66% of all crash events (crash / near crash)
10% of drivers are using cell phones at any one time
73% talked on cell phones while driving and 19% admitted text messaging while driving
2/3 of teens admit to text messaging while driving; 16% of all cell phone users
Simulator study showed cell phone users were 5 times more likely to be in a crash
No difference in the interference from a hands-free
Relative risk of cell phone use is similar to the hazard associated with driving with a BAC of .08
Almost 80% of crashes and 65% of near misses occur within three seconds of some form of driver distraction

So I’m as guilty as the next guy of driving while using a cell phone (although I admit I can barely text message effectively even without driving, so I have never tried to text message while driving a car), but with stats like those above its time to change our ways –cell phone use + driving really is a ticking time bomb.

Golf Time, President’s Reception, and Closing Dinner

Friday afternoon was reserved for the Pete Z. Memorial Golf outing, and although I don’t play golf I still miss Pat Patrick’s presence for this, as he spearheaded this event for many, many years until his passing last year. My favorite “souvenir” of the entire conference is still the famous Pat Patrick “ditty bag” as it is as colorful as and well received as its original creator. A little background, when the memorial golf outing was just getting started, no one had the budget to create and fill a “goody bag” of sorts to give to golfers who participated. But in jumped the always dynamic and enthusiastic Pat Patrick, who, with his irresistible charm and persuasion worked the phones to get loads of donated goodies to stuff the bags with, and, as I recall, even had the bags themselves donated. The tradition has continued ever since, and this year AFLA gave out nice blue canvas bags with the Pat’s likeness and the label, “Pat Patrick’s Ditty Bag” emblazoned in white on the side, to both golfers and non-golfers alike.

In what always seems to be the fastest couple of days on record, the annual conference came to a close, with networking at the Presidents cocktail reception, and then the convention dinner, where prizes for golf and other awards were presented. Once again, the whole conference was informative and enjoyable, and, as usual, everyone hung around overtime at the final hospitality reception after the dinner (and later at the hotel bar), as no one wanted to leave the gathering of this cohesive group of fleet professionals – it’s just a great group to be around, and, for me, one of the joys of being in this business.

Some of the corporate fleet managers that attended this year's AFLA Conference

P.S. I just can’t resist mentioning this…it just so happened that the Mrs. America Pageant was just wrapping up at the Loews Ventana Canyon Resort after a week or so long stay, and that the final contest and event coincided with the first night of the AFLA Convention, so throughout the hotel the entire first day/night there was a plethora of beautiful ladies walking around the hotel in sashes identifying their respective home state. It was heard mentioned that some enterprising AFLA officials, ever on the ball, took it as a public service to spread the word and good tidings of the AFLA organization to as many “state sashes” as could be found. Also enthusiastic to give of themselves and educate the public, these AFLA chaps…

2007-10-02T18:29:00.000-05:00

Vol. 3 No. 18

Automotive Fleet and Leasing Association (AFLA) 2007 Annual Meeting and Conference

Turning Change into Opportunity: Part I

Once again, my favorite fleet trade association, and the one to which I have belonged for the longest amount of time (this marks my 21st year as a member), the Automotive Fleet and Leasing Association, held their 39th annual meeting and conference. This year’s conference was in Tucson, Arizona, September 5 – 7, at the fantastic Loews Ventana Canyon Resort. The conference was crammed full of on point, interesting motivational and information seminars, and, of course meeting up again with the “best and brightest” veterans in the fleet business (which this group never fails to attract), is always great pleasure.

The conference this year kicked off Wednesday night with an inspirational keynote by Mike Pitcher, Executive Vice President of LeasePlan USA, entitled, “Attitude is Opportunity.” I was privileged to here Mike speak before and he certainly has a talent not only in addressing and holding the attention of a packed house, but, indeed, gives as inspiring and content filled presentation as I have ever heard. His observations and facts on attitudes in the workplace, for instance, were particularly enlightening – for instance, 53% of working people surveyed say they hate their job…and 60% of those hate their job because of their relationship with their boss. It turns out that although it is usually assumed that the number one satisfaction criteria for a job revolves around pay, in fact, the quality of life issue is usually of a higher concern in job satisfaction. Mike closed off by relaying some facts about how we all, in fact, are probably better off the 90% of the people on earth, something we forget in our daily tribulations. All in all, Mike's talk was a great way to kick of the conference, and from there, go a opening welcome reception, complete with classic cars.

AFLA Wecoming Reception with Classic Cars

Day 1 – What Changes are Coming…

The next day kicked off with a keynote by General Charles Wald, USAF (retired), entitled “Securing America’s Future Energy.” Not a light topic, General Wald’s point, that “America’s extreme dependence on oil is an unacceptable threat to national security and prosperity” is harsh reality. One needs only to look at the chart below, presented to the group, to understand the truth in the statement.

Another very serious presentation followed General Wald’s address, Ted Chu, Lead Economist of General Motors Corporation, addressed the group with a talk entitled, “Current State of the Automotive Industry: Where is it Going? Mr. Chu’s bottom line, “there will be more business, but it will be a much tougher business.” One thought provoking slide, on model proliferation and the “big three” share of the market, is displayed on the left– just about ten years ago there were 287 models and the “big three” had 72% market share…now there are 352 different models and the “big three” lost 16% points of share…it paints a fairly picture about the “tough” part for the industry.

Ted Chu was followed in the program by a presentation by Tom Kloza, Chief Oil Analyst, Oil Price Information Service, entitled, “Fleet Fuel Pricing Trends.”

And Now for Something Completely Different…

So after three very serious and sobering presentation, it was time for lunch and then a very light, entertaining and down right funny show, “Opportunity Knocks” by Mike Rayburn, of Quantum Talent. Mike’s “what if I could” reoccurring self question, and his unique combination of tunes which music/artists with different lyrics (my personal favorite was Led Zeppelin does Dr. Seuss or Bob Marley sings Garth Brooks) made for a very vocal and lively afternoon - I can see why the guy had 8 command performances at Carnegie Hall. Its much easier for me to show you the man himself rather than try to describe him, so, through the magic of YouTube.com, here is a video clip –

Okay, so I should probably close on the “note” above, and save the rest of the serious stuff for later…

Mike Rayburn with Drew Meyermann from the AFLA staff

Next, AFLA Conference Part II

2007-09-23T11:23:00.000-05:00

Vol. 3 No. 17

A Personal Thanks to the International Automotive Remarketers Alliance (IARA)

It’s things like that are remembered the most…

I was debating on whether to make a blog entry on this, because I don’t want it to sound like self aggrandizement (although it kind of does, and in truth probably, kind of is…), but I am very proud of the fact that upon the expiration of my term as Director, the International Automotive Remarketers Alliance (IARA) recently presented me with a plaque to recognize my contribution to the group. As you can probably guess from reading just about anything I’ve written about the industry, things like this mean a lot to me, as does participation in the group itself. The thing I like best about the car business is interacting with the people in it, and, as I've become more focused on the remarketing area of the industry over the last half dozen years or so, I’ve become continually more enthusiastic about this rapidly developing and advancing sector of the business, no better evidenced than in the membership and activities of the IARA.

Even a few short years ago, if I had predicted that the “best and brightest” in the broadly defined automotive business would create and participate in a group focused on vehicle remarketing, most would think I was a bit off (most usually do anyway, but that’s another story). If I would have said that in just a few short years after its launch, this remarketing focused alliance would launch the industry’s first full scale Automotive Remarketer Certification Program, with a sophisticated curriculum that includes 25 courses divided into five units (Remarketing Channels, Pre-sale Activities, Actual-sale Activities, Post-sale Activities, and Legal, Ethics and Terminology), I can say most everyone in the industry would have said that was beyond wishful thinking. But it is true, an organization like IARA in just a few short years has moved the needle so far in concentration of vehicle remarketing that it is in reality helping to transform what used to be the least advanced and least sophisticated area of the car business, and is propelling it to the forefront in education, best practices and in advancing technology.

This organization truly is living up to its mission statement, to be the primary source providing education, ethics, operational standards and best practices governing the automotive remarketing industry. I’m proud to have been recognized for having served as a member of the Board of Directors, and hope to contribute as a member for many years to come. Thanks to you all, “car guys.”

2007-09-16T19:12:00.000-05:00

Vol. 3 No. 16

Social Networks and Web are Changing Everything: Part II

When My Favorite Author on Entrepreneurship and Finance Topics Writes a book on Social Networks and Communities You Know its Hot…

This is a quick follow-up on my last entry on social networks. Not only has there been quite a few articles since then in the Wall Street Journal featuring various companies or aspects in the field of social networks, but I recently found out that, David Silver, my favorite author on entrepreneurship, finance and VC topics just wrote and published a book on the topic, entitled, Smart Start-Ups: How Entrepreneurs and Corporations Can Profit by Starting Online Communities

Silver has been writing about entrepreneurship, business, venture capital and finance for over three decades, and has published over 30 books on these topics. In addition, he has his own angel capital firm Sante Fe Capital Group. I don’t think there is a more experienced, up to the minute, knowledgeable person on how to successfully identify and build a business around a market need or upcoming disruptive trend. So, of course as soon as I found out about the book, I bought it, and as is typical with one of Silver’s books, I’m about half way through and can’t put it down… [I can’t say I have every book Silver ever authored, but there is almost an entire shelf in a bookcase devoted to his publications and this one brings my collection to numbering in the middle “double digits”]

Silver’s insights on the phenomena of the impact and future growth and effect of social networking online and mobile communities are very enlightening, and help to crystallize in a much better and more researched way, the point I was trying to make in my last blog entry, as exemplified in the Marie Digby/YouTube ruse; indeed, that social networking is here to say, and the new paradigm changes everything.

Why does all this belong in a “Fleet-ing Thoughts focused blog? Because if the changes wrought by online and mobile communities are as broad and vast as I’m now sure they will be, they should in no small way affect all aspects of the automotive business as well, including fleet and remarketing.

2007-09-13T20:01:00.000-05:00

Vol. 3 No. 15

Social Networks on the Web are Changing Everything…

....When the Best Way a High Powered Music Label can Think of to Launch the Career of One of its Signed Artists is to have her Masquerade as an Unsigned Unknown on YouTube.com

Although this entry is unique in that it has almost nothing to do directly with the car business or or automotive conventions. A Wall Street Journal front page article caught my eye last week that clearly identifies a major paradigm shift in marketing and promotion, which, of course will effect how the car business (one of the largest media advertisers in the country) will be conducted in the future.

The article that amazed me was written by Ethan Smith and Peter Lattman, and appeared as the center feature article on the front page of the Wall Street Journal, last Thursday, September 6, 2007, entitled, “Download This: YouTube Phenom Has a Big Secret” Singer Marie Digby Isn’t Quite What She Appears: ‘Make People Like Me’

So What’s the Big Deal?

Twenty four year old singer Marie Digby’s simple, homemade music video on YouTube has been viewed over 2.3 million times, and according to what viewers where supposed to believe, bootstrapped her into fame and fortune and a major record contract almost overnight. As Hollywoods Records label declared last week: “Break through YouTube Phenomenon Marie Digby Signs With Hollywood Records.”

Only problem is, it appears that Ms. Digby signed with Hollywood Records over 18 months ago, back in December of 2005, and the whole “rags to riches” YouTube launch, according to the WSJ article, was cleverly manufactured by the record label itself.

So What’s the Point?

I think this represents a monumental paradigm shift in commerce and promotion that is in most circles, still being discounted right now (the WSJ doesn’t under rate its significance though as it did make this story a front page center feature…above the fold), but will greatly effect all large consumer industries in how their “products” are promoted and sold, including, of course, the auto industry.

To me the music and entertainment business for the last 50 years is similar to the car industry, in that it has always been the epitome of the theory that you need to spend huge amounts of money for promotion as the only successful entry ticket to widespread sales success. Hollywood has for a long time been the capital for “over the top” spending to promote talent. Indeed, I don’t know much about that business but don’t music labels justify taking the high percentage of music sales revenue (as opposed to giving it to the artist) precisely because of their finance driven promotional model?

So given this history, all of sudden the best way these folks could figure out how to promote a new artists is to mask their financial clout backing her and produce a home grown YouTube video, and then cleverly, through brains not money, stack the deck in clever online search methods (the article highlighted how the initial video recording engineered search traffic by “posting covers of hits by Nelly Furtado and Maroon 5, among others, so that users searching for those artists’ songs would stumble on hers instead”) so she was “discovered.”

My Observation

Where success in the game used to be predicated on who had the greatest financial resources, with some "brain power" added, the Internet networking phenomena now has changed the paradigm so that success is proportional to the "brain power" available and now cash is the secondary requirement. Now this doesn’t mean that everything now is fair and egalitarian all of a sudden - as evidenced below, as always, those with a whole bunch of money can buy enough "brain power." However what it does mean is that if you just have "brain power," right this minute while the whole old system is in the process of disruption, you can have equal to or better results than those who have access to the “system” and a whole lot of orthodox backing (as evidenced below, the institutions are using the non-capital requirement means to effectively promote, even though they have access to every means at their disposal). As the WSJ article said, “traditional media conglomerates are going to new lengths to take advantage of the Internet’s ability to generate word-of-mouth buzz.”

It occurs to me that Hollywood Records didn't do a lot more than what a clever Ms. Digby could have done on her own, which is exactly how they could so easily sell the fabricated "rags to riches" story with some believability.

A Final Note

As mercenary soldiers are never quite as good as those fighting for themselves, for a while, at least, those folks working for themselves as entrepreneurs may have the ability, under this new networking paradigm, to “out think” or at least “match” the established competition to gain leverage. The entry ticket now depends as much on clever ingenuity as it does capitalization, even in traditionally capital intensive marketing budget industries. I think that’s why social networking is one of the hottest models for VC’s right now, its why the youtube.com folks are rich, and its why Google has a cap value worth more than the all of the US auto companies combined, yet they have very few tangible assets. This phenomena must greatly effect the auto industry of the future, and, is just now in the beginning stages of being recognized for the impact it will have in years to come.

2007-08-27T07:36:00.000-05:00

Vol. 3 No. 14

A Short Primer on the Vernacular of Buying Fleet Vehicles…

Be sure to use your FIN/FAN, compare various vehicles Fast Start, Front Money and Back-end Money, go for all Rifle Shot Cash that you can, and then, of course, negotiate from Dead Net…

My business now is in remarketing fleet and institutional vehicles, that is, selling them at the end of term, not buying them, but for a long time I was on the new car sales end of the business (both as a franchise dealer, and at the manufacturer level, in piloting smaller fleet buyer sales programs), and given that its the time of year for annual ordering, I thought it would be interesting to highlight some of the unique language and process associated with the fine art of fleet purchasing. So below is a summary of an “inside look” at the incentives, and language, of fleet buyers.

The Basics

First, in order to qualify for all of the fleet incentive goodies, you need, in fact, to be registered as a fleet with the manufacturers. In fleet buyer lingo, you need a “FIN/FAN,” that is, a Fleet Identification Number (Ford) or Fleet Administration Number (GM and Chrysler). In order to get this designation, a company must apply to the respective automaker, and must have purchased, registered or leased five or more new vehicles, any make or model, in the company name within the last 12 months, or alternately, the company must have a minimum of fifteen vehicles in its total fleet, any make or model, registered or leased in the company name. Once registered as a fleet, on any vehicle purchase or lease a company can take either the factory fleet incentives or discount, also known as “National Fleet Incentives” and “The Street Program,” or whatever retail rebate is available for the particular make and model in that region… you can take whichever is greater at the time, but never both – note: retail incentives tend to fluctuate monthly and can be regional, while fleet incentives are typically set at the beginning of the model year and stay constant nationally throughout the year.

The “Extras”

But the fleet incentives don’t just end with one simple rebate, if they did it would be a much easier world for all. First off, while all new vehicle fleet purchases except federal government units (remember all fleet falls into one of three large categories: commercial or corporate vehicles, daily rental vehicles, and government & municipal vehicles) must be sold through a manufacturer’s franchise dealer (I always thought it ironic that this federal government mandated rule carves out one exception, indeed, for federal government purchases which can go “direct”), unlike a retail sale that typically starts at something off of MSRP, these purchases start at “Dead Net” or “Triple Net” and, after all factory incentives, work there way up with a “Dealer Mark-up,” that is, the amount that the franchise dealer charges, over dealer cost (less all factory incentives), for preparation and profit. “Dead Net” or “Triple Net,” is defined as the original factory invoice, less the dealer “Hold Back,” which is a percentage amount of the vehicles cost that the manufacturer “holds back” from the invoice and refunds to the dealer after a new vehicle is sold (paid out annually, quarterly or monthly – a “Clean Invoice” refers to a manufacturer’s invoice where this Hold Back money is stripped out of the net invoice, as it is specially done with large, multi unit fleet deals, its normally included in the invoice price for all other vehicle orders), less “Floor Plan” assistance money (a number of days interest cash the manufacturer usually rebates back to subsidize the dealer floor plan charges) and “Supplemental Floor Plan” assistance (usually a set amount of additional floor plan/interest rebate to the dealer), and any other dealer discount money – in other words, it’s the actual net (net/net) amount the dealer ends up paying the manufacturer for the unit, less all arcane hold backs, floor plan finance rebates, etc.

So, as a fleet buyer you now are paying Dead Net invoice, less either the National Fleet Incentives or Retail Rebates (whichever is the greater deduction), plus some Dealer Mark-up… Of course, the “extras” usually don’t end there, its not that easy… Now we get into what used to be the “secret” financial rebates and incentives…however, given how often they have been used over the last twenty years, with the domestic manufacturers at least, they aren’t that secret any longer. On a side note, to give you a clue of how long ago I entered the fleet business, these extras, “Back-end,” “Front Money” and “Rifle Shot” or Shotgun Money” were, indeed, kept secret back then, even to the selling dealer, who simply negotiated his mark-up above Dead Invoice with the buyer, and the extra money was sent directly to the fleet account without the dealer’s knowledge or contribution. The automakers even had a special prohibition that neither party, the fleet buyer nor the manufacturer, was to disclose these extra incentive amounts to anyone outside the parties involved (to this day I haven’t a clue as to whether this non-disclosure provision was in a written document or simply a handshake deal, I was only the dealer and not privy to these negotiations).

In any event, it’s a rare fleet buyer today that doesn’t get many additional posted and negotiated rebates, incentives and discounts, over and above the standard fleet discount. Even the smallest guys seem to get some of the extra benefits, at least from the domestic manufacturers. First you have your extra “Back-end Money” in various shapes and sizes - this is the blanket term for manufacturer’s incentive programs, beyond the Street Program, where money is paid to qualified fleet buyers on selected models after the vehicle is delivered. This can include volume discounts, that is, the volume rebate for ordering a certain number of units all at the same time – note: this is a per unit payment and sometimes can be negotiated so that the buyer does not have to take delivery of the ordered units all at once, but in staggered intervals over a few months. You have various “Front Money” programs as well, which is defined as cash paid on a per unit basis by a manufacturer to induce the purchase of product. This can include extra rebates or refunds for specified options purchases, as well as “Early Order” or “Fast Start Money” sometimes offered for factory orders placed far in advance of the beginning of the model year by buyers. There a valid economic reason for the manufacturer to offer Fast Start cash, beyond the normal volume sales advantages, in that these orders allow the factory to fill their order bank up and obtain discounts, in turn, from their suppliers.

The Extra “Extras”

Finally, if it isn’t all confusing enough, “Rifle Shot” or “Shotgun Money” is often available. This is an unpublished volume discount or incentive that is negotiated directly between the fleet buyer and each manufacturer as an agreed upon special rebate on every make/model vehicle either leased or purchased by that company from the specific automaker during a given model year. It can be negotiated as a credit off invoice or a lump sum quarterly, semi-annual or annual payment, with the amount on each unit dependent upon make/model, volume and the manufacturer. Although usually reserved for higher volume fleet buyers (and still the specific terms and numbers of each deal are supposed to be kept very quiet by both parties), there is usually some extra cash available if a fleet buyer is considering switching brands. Manufacturers frequently offer “Competitive Assistance Allowance” or “CAA,” a special rebate incentive to encourage fleet buyers to switch buyer loyalties.

...And Then There are Daily Rental “Program” Vehicles

Now, all of the above applies to every sector of the fleet business, but, as readers of this blog are aware, up until very recently the vast majority of daily rental fleet units sold in this country where sold under each domestic manufacturers “buy back” program, more commonly referred to as “Program Cars.” I explained about the buy back Program Car phenomena and a gave a short history in the blog entry just prior to this one, but suffice it to say that on top of this program guarantee, of course, many manufacturers paid lots of the fleet incentives outlined above on every unit ordered, so it served a rental operator well to churn as many new units through the system as quickly as they conceivably could throughout the course of a model year. Of course, these extra sales exacerbated the automakers losses on the program, the “lose money on every unit, but make it up in volume” reality, detailed in my prior blog entry...

On Something Completely Unrelated, A Special Thanks…

For a blog such as this, on a rather specialized topic that does not talk about things that invite regular outside commentary, its difficult to figure out whether or not anyone out there is reading at all or noticing what is said (I sometimes think maybe I should add some flaming political commentary or a racy picture of Britney Spears just to see what would happen). So it makes comments such as those by EJ Lawless, in his Auto Industry Start Ups blog, all the more gratifying and welcome. It proves not only is someone reading this on a regular basis, but it is being read by an educated industry veteran who is also an auto blog author. By the way, its apparent from reading his blog that EJ is a much better and more entertaining blog author than I am, I might add, which make his observations on a topic long ignored, current and new opportunities in tech start-ups in the auto industry, and entrepreneurship in general, all the more interesting and habit forming, at least for this car guy.

2007-08-06T07:08:00.000-05:00

Vol. 3 No. 13

Just a Few Lazy Observations (and fun video trailers below) on a Hazy August Afternoon…

Been Kind of Overwhelmed Preparing our Off-Fleet “Direct to the Public” CARLIQUIDATORS.COM Site for Launch and Haven’t Posted Recently, so I’ll Jot Down Some Thoughts to Try to Catch Up…

Wrack Up A Dream Car Lately?

I really enjoyed Jennifer Saranow’s Wall Street Journal, June 15, Weekend Journal cover story, “Honey, I Wrecked the Porsche.” I often wondered how difficult it was to control some of the cars I’d really want to drive, and now I have a reason not to want a $500k + automobile. It seems as more of these cars “hit the road” in the hands of inexperienced drivers, more of them get hit on the road, in greater proportions… Saranow’s article said that in the last 18 months, drivers across the world have cracked up at least 6 $1M Ferrari Enzos…only 400 of which are built…if I wracked up a car like that, I don’t think they would ever get me out of financial intensive care…

So many of these accidents with exotics are happening so regularly, there’s even a Web site devoted to it, WreckedExotics.com, which added over 700 new photos of cracked up, super expensive cars a year, and gets over 650k visitors a month. The article also says that according to Leland-West Insurance Brokers, most of the supercar accident claims come from men aged 25 to 40 driving newer, high-performance cars too fast and losing control. (Okay, so I sort of fit the age bracket and have never had a problem wracking up a car-- I just need the supercar now, right?).

Closer to our business, even those folks who rent out the super fast exotics are not immune. Tthe article states that according to New York Gotham Dream Cars, a rental car company that rents out supercars for the day, one in fifty of its rentals comes back damaged…bet they don’t offer any collision damage waivers…

Finally, one other good reason why I really don’t want to smash up a supercar (like I need a reason), it turns out when an accident happens, all the usual gawkers care way more about the car than the driver, so you can’t expect any sympathy… The article quotes one person who smashed his Ferrari 360 into a light pole in Palm Beach, Fl as saying that he heard comments from passersby like, “wow, you are really having a bad day,” “that is really a bummer,” and “your toy is broke”…”Nobody is really concerned if you are hurt” the driver of the Ferrari said…

Ford Fleet Show a Bit Early this Year…

I’m used to the Ford Fleet Show happening at the end of July, but it seems alternate years they have it a bit early, and it falls the end of June. This year it was June 24-26, in, of course, Las Vegas. While I didn’t stay very long, it was another opportunity to meet up with old friends before and after the event – fleet folks are my favorite people, and Vegas, of course, is my favorite venue (I feel kind of bad for anyone in the car business that does not like Las Vegas…).

…And Finally, a Few Words about Carliquidators.com…or…The More Things Change, the More They Stay the Same…

So I should say a few words about our new consumer focused venture that I’m very excited about and that has been taking up most of my “extra” time.

First, a little background: When I first entered the car business, almost 23 years ago now (at age 10 folks), the rental industry was a different place than it has been the last 15 years or so. While there were domestic manufacturer “program” cars, that is, cars that were short term (four to twelve month) leased to the rental fleets with a guaranteed buy-back or turn back provision (kind of like a “put” option that kicked in after four months), at subsidized rates on some vehicles, the majority of the major daily rental car companies’ fleets were “risk,” or owned vehicles that the rental operator was responsible for remarketing at the end of their term. These rental companies therefore had a lot of well maintained, depreciated vehicles, originally purchased at very low prices (remember rental folks buy a lot of cars, so there are a lot of “cash on the hood” incentives, at least for the domestics), which represented fantastic potential bargains for retail consumers in the market for slightly used (on average 6-9 month old, same model year vehicles, with 10-15k miles) cars.

So it was only natural that all of the major rental car organizations, and their licensees and affiliates, back then offered these cars for sale direct to consumers on their own retail focused used car lots around the country. Hertz, Avis, Budget, Thrifty, etc. all offered their turn-in rental vehicles direct to the public on their own used car lots, as it was a benefit both to them in turning their cars quicker and for a few extra dollars, and a big benefit to consumers.

Indeed, retail consumers flocked to these used car, off-rental sales locations, operated by the rental folks, and bought so many of these great value cars, that local new car dealerships around the nation felt the competition, which effected both their used, and new car sales. Back then, in the mid and late eighties, it was a different era for domestic manufacturers, they had much more clout in the market, as did their dealer representatives, and so the “heat” that the dealers put on their manufacturers essentially forced these manufacturers to get the rental car companies out of the “slightly used car business” not by prohibiting them from selling off their used rental cars to the public, but by subsidizing the monthly depreciation rates of all new cars sold to the rental folks, coupled with a guaranteed buy back after a short 4-9 month rental run. The manufacturers would then sell these cars back to their franchise dealer body, in company “closed” physical auctions. As long as the monthly depreciation rate artificially subsidized by the manufacturers stayed below the normal monthly rate, it didn’t pay for any rental car company to pull a car “out of the system” to sell to a retail consumer.

Finally, after a few years, Detroit’s “guaranteed pay” contracts with the United Auto Workers Union effected the situation even more,as they guaranteed almost full wages to plant workers, whether or not plants were producing vehicles. With this development, rental car program buy backs became a way for Detroit to keep plants producing vehicles that were not required by retail demand, that is, rental car distribution became a dumping ground for excess inventory. As a consequence of all the above, most of the rental companies ended or significantly wound down their retail car sales divisions, with the notable exception of Enterprise Rent A Car, which has the distinction of never having taken a “program” (guaranteed buy back) car from the manufacturers – bucking the trend of the entire industry. Enterprise actually strengthened their retail and wholesale distribution networks in the void and lack of competition for the retail or wholesale buyer left by the other rental car organizations. Subsequently, they became far and away the most successful and profitable rental car entity in the US.

Of course there were exceptions, and even when all of the major rental car licensors where close to 100% program cars, some licensees and smaller independent chains took risk vehicles and maintained direct wholesale and even retail distribution channels, but for the most part as long as Detroit was motivated to produce more cars than retail consumers where buying, rental car fleet sales became a safety valve for production, and subsidized depreciation and guaranteed buy backs were the norm for at least the last 15 years. Rightly called the “heroin” of the domestic car industry, in that it was a losing proposition cycle that they all wanted to break, but felt they couldn’t without dire results: significant production shrinkage and plant closings.

Now jump up to the 2007 model year. Detroit manufacturers are in such a financial quagmire, that bankruptcies are even rumored. The tremendous annual losses that were always directly attributable to the rental car program cars’ greatly subsidized depreciation rates could no longer be financially tolerated, and, indeed, the cold withdrawal medicine of decreasing production and shutting down excess plant capacity is the only option. In this reality, now the old proportional majority of “program” cars in rental fleets as compared to risk vehicles is quickly reversing itself, and now, for the first time in over 15 years, all of the major daily rental companies have many, many more vehicles which they own and must dispose of themselves. Now, just like many years ago, (or like Enterprise Rent A Car all along), the conventional channel of sending all vehicles to a physical wholesale auction is not effective enough for a rental car company to dispose of all of their turn in vehicles quickly, let alone in a cost efficient manner. Even online wholesale channels, an electronic form of a wholesale physical auction, may not take care of every increasing remarketing need…so what new way will rental car operators look to turn inventory quickly and efficiently?

Why Not Use the Remarketing Method that Worked So Well In the Past…But Make it Better…

It always seemed to us that it was kind of a “no-brainer,” the last time in history the daily rental companies had predominately “risk” cars in their fleet, they marketed them, after a few months usage, to an eager retail public car buyer, with great success. A win/win situation for all, consumers got a great bargain (essentially a new car with the 15% depreciation that comes from driving it off the lot, already deducted), and the rental companies moved inventory quicker, and for incrementally more dollars. The only problem, back in the old days when I started in the business, was the high overhead the rental companies accrued from having to set up physical used car lots and driving retail traffic to these stores. After all, unlike a regular new or used car dealer, the rental car operators only had one sector of used car, a 6-9 month old current model vehicle, which is great for that particular type of buyer, but not very versatile to make the most use of the high volume traffic to underwrite the fixed overhead of a physical used car store. Therefore the mark-up on each vehicle had to be somewhat higher to recoup the fixed overhead. – Back then there was no alternative to the physical used car lot, in combination with print advertising, but today the automotive retailing world has changed….

With the advent of the ubiquitous Web, we can make things a whole lot more efficient in off-rental fleet consumer retailing. By offering these vehicles online and advertising them online, all in one Web location for all off-rental car companies, we can drive the buyers for this particular sector of inventory directly to the supplier, and the rental operator can simply do the delivery at his/her rental location, without the need for a stand alone physical sales lot. More savings are passed on to the consumer-- the discounts are even better than yesteryear, as the rental car operator has neither the risk nor the continual overhead of a physical lot, and, by combining the inventories of many rental car companies throughout the country, we create a “one stop shop” for a full range of vehicles, able to be delivered in a diverse geography close to the vast majority of US population centers.

So Carliquidators.com was created…

A natural outgrowth of our online upstream remarketing experience in commercial lessor driver and wholesale sales experience, we conceived and recently created Carliquidators.com to be the retail portal for consumers to find off-rental vehicles for sale, direct from rental companies around the nation. The savings to the consumer, with this car rental “direct to retail” model on the Web, is tremendous on these “slightly used” vehicles, higher than even the “old days” when rental companies had to pass on the overhead of maintaining “bricks and mortar” retail locations. In fact, Carliquidators.com is the first site on the Web, to our knowledge, that offers off-rental vehicles at the same time, and at the same wholesale price, to retail consumers and car dealers alike – kind of like the consumer for the first time, being allowed into a “closed” dealer-only factory sale.

Consistent with the consumer focus, the site offers the convenience of “one-click” financing through conventional car loans, used car leasing, or even home equity offerings, as well as extended service contracts, although most off-rental cars come with the balance of the manufacturer’s warranty. As the vehicles are offered below Kelley wholesale prices, in almost all cases, for just about anyone with an average credit rating or above, the units can even be financed thousands of dollars above the sales price, which allows for true no money down financing on all used cars, including taxes and tags, extended service contracts, maintenance packages, etc – as good or better than any “certified” program on the market, and, much, much cheaper. (id you know the average certified car sells for over $2000 above its normal retail sales price?)

I’m personally very enthusiastic in offering, what I think, is truly new (or maybe old) evolution in automotive retailing, the direct “institutional supplier to consumer” used car model (as can probably be seen here, as in over a year and half of posts I have never centered a topic around my “day job” per se), and can’t wait to start offering cars on it to consumers on a national basis and getting their feedback on the program. We will be ramping it up slowly, while we refine the process (right now there are only cars from Indianapolis, but we will be adding cars in Chicago and Los Angeles soon), but if the retail reception is good, we should be able to have inventory from rental locations from around the country within a short time. Check it out, give me your feedback, as this part of what we do is entirely new. It’s never been done before in this industry to this scale (institution direct to consumer, online, passing on the distribution savings to buyers) - let me know what you think…

P.S. So just because its a lazy August afternoon, I included a few video trailers promoting carliquidaors.com that we did for fun and released on YouTube.com recently - see the full gamat at carliquidators.com trailers...

2007-07-09T07:06:00.000-05:00

Vol. 3 No. 12

The 2007 National Vehicle Leasing Association Annual Conference, Exposition & Auto Show, Las Vegas, June 6-9

From the Looks of this Conference both the NVLA and its Members are on a Serious Upswing…

Although my trip this year to Vegas for the Natinal Vehicle Leasing Assocation Convention was unexpectedly cut a bit short (remember, my Vegas trip this time started at the Car Rental Show, which began three days before the NVLA convention), it also turned out to be one of the best annual conventions I remember NVLA ever having conducted. Now I’m not just saying that because this annual NVLA event was the first one ever held in Las Vegas, my favorite convention city, as the four day program was jam packed with the best collection of seminars, presentations and networking/social events I can remember. My hat goes off to my old friend, Tarry Shebesta of LeaseCompare.com, and Mike Wood, the conference Co-Chairman for producing a truly outstanding and memorable convention at the fabulous Venetian on the Las Vegas strip, in this, NVLA’s 29th anniversary. It should be noted also that Tarry, at the commencement of this convention, was inaugurated President of NVLA, and everyone that has known Tarry for even a short time knows that this honor is both well deserved and, as I see it, a great benefit to NVLA. He is a gifted visionary and spokesman for the leasing industry.

As to the networking/social events, given the venue (the conference was held at the fabulous Venetian), they were absolutely first rate. The first day kicked off with golf at the Bali Hai Gold Course adjacent to the Las Vegas Strip, sponsored by Network. It was followed on day three with a dinner event sponsored by Daimler Chrysler, that featured the unique Bob Arno, a professional comedian and pickpocket (someone might say this might be more appropriate for a group of car dealers…but I certainly wouldn’t say it). This was followed the next day by a dinner sponsored by GM, and then Cirque du Soleil’s Mystere show. Throw in a few lunches on the exhibit floor, and this ensured lots of catching up with old friends in the business.

The seminars were also first rate, kicking off on the first day with Tarry’s own presentation, “Maximizing Your Presence on the Web” and a three hour time management presentation by the Franklin Covey/Franklin Planner folks. On a personal note, I think the Franklin Covey workshop (scaled down from their full day event), is still one of the best time organizing seminars out there, and a must for anyone who needs to organize their day. Believe it or not, we devoted half a day (of a two and half day program) to the Franklin folks way back, over ten years ago in the original Ford Mainstreet program, the small fleet sales dealer training seminar I used to conduct…we even gave out “Mainstreet” versions of Franklin Planners we thought it was such valuable program.

Throughout the four days there were seminars entitled, “Selling Cars Online: Easy as 1,2,3,” “Deciphering Credit Reports and FICO Scores,” and “Vehicle Reconditioning and Remarketing” (my favorite topic), to name just a few. There were also presentations specifically geared for consumer lessors (“Consumer Lessor Roundtable”), and small commercial lessors (“Commercial/Fleet Lessors Roundtable,” “Medium Duty Trucks: Spec’ing Bailment Pools, Body Installation and Upfitting”).

To sum it up, without taking anything away from the other annual NVLA conventions I’ve attended in the past (note: I don’t go quite as far back as 1968 when the organization was created, but, I didn’t just start yesterday either), I think this was the best, most information packed, most well planned NVLA Convention I have ever attended. As (bad) luck would have it though, I was called away far too early and missed a good deal of the program. These are busy times for us here at Driveitaway.com and Carliquidators.com. And leaving Vegas early in general is usually difficult for me, but leaving a fantastic convention and some great car folks in Vegas early, well, let’s just say it’s not something I want to make a habit of…

2007-06-18T07:47:00.000-05:00

Vol. 3 No. 11

The 2007 Car Rental Show, Las Vegas, June 4-5 – “The Times They Are A-Changing”

A Couple of Later in the Year this Time, Sherb Brown & the Bobit Media Crew put on Another Great Show…

Anyone aware of my day job knows that the changes that are now going on in the car rental industry, as it transitions from mostly “program” (manufacturer guaranteed buy-back units) to “risk” (units that the car rental company is responsible for reselling on their own at turn-in time) vehicles, is the number one priority topic in our upstream remarketing activities these days. Also, anyone that reads this blog (is there anyone, really?), knows how much I like the city of Las Vegas in the summer time. So, once again, when you combine the two in Bobit Business Media’s annual Car Rental Show, June 4-5 this year at the Las Vegas Hilton, you could have wagered on my being front and center. And, I might add, with perfect timing, the annual National Vehicle Leasing Association (NVLA) Convention followed right after, down the street at the Venetian, June 6-9th – (more on that event in a subsequent blog entry).

Unless I’m mistaken, this year’s Car Rental Show was bigger and better than ever – condensed to a 1 ½ day program, it was crammed full of information. The kick-off began withSherb Brown, Vice President & Group Publisher, Bobit Media and the first keynote presentation came from Peter Vroom, Executive Director of the Truck Rental and Leasing Association (TRALA) on the current priorities facing the vehicle rental and leasing industry, and was followed by other excellent presentations and panel discussions throughout the two days. The other special keynote speakers included Bruce Charendoff, Vice President, Government Affairs, Sabre Holdings/Travelocity with a presentation entitled, interestingly enough, “Renting a Car Isn’t a Sin, Yet It’s Taxed that Way,” and noted industry veteran and highly successful automotive entrepreneur, Denny Hecker, Chairman, Advantage Rent A Car and Bill Plamondon, CEO, Advantage Rent A Car, speaking on “An Insider’s Perspective on the Auto Rental Industry.

As to the group presentations, they were all first-rate, as you’d expect at any Bobit Business Media event, offered in concurrent sessions under two broad categories: “Improving Operational Effectiveness” and “The Power of People.” Under the first category, there was a Risk Management Roundtable presentation, and panel discussions entitled, Technology Trends, Fleet Management: Are You’re Smarter than a Fifth Grader, and Risk Vehicle Selection Methodology, chaired by my old friend Dave Funston. Under the second category, running concurrent with the first, were panel presentations entitled, The Other Side of Car Rental Revenue! Counter Sales, Revealing the Customer Experience: J.D. Power Car Rental Study Results, and Incentive Plans and their Legal Implications. Again, while a lot of the information in some of the seminars didn’t apply to what we do directly here at Driveitaway, the more we learn about the current best practices and issues facing our clients, the better we can understand and serve the industry on the remarketing front.

There were also a few specific presentations, in addition to the keynote speakers, that were presented to the entire group, including one by Betsy Synder, Credit Analyst at Standard & Poor’s, entitled, The Auto Industry from a Wall Street Perspective, and one by Michael LaPlaca, Partner, LaPlaca McKenzie & Michael Towers, CEO, Fleet Salvage & Estimating Systems, entitled, Damages: What You’re Legally Entitled to Recover and How to Do it the Right Way.

Of course, in addition to the seminars and keynote presentations, there was an active exhibition floor filled with a variety of vendors servicing the car rental industry. The open convention floor mingling (at lunches, receptions, etc.), is always my favorite part of any conference, as I get to catch up with old friends and meet many new ones. I caught up with both licensees of major car rental licensors like National/Alamo, Avis/Budget, etc., and large independents throughout the country including Advantage Rent A Car (Minnesota), Fox Rent A Car (Los Angeles), Ace Rent A Car (Indianapolis), Midway Rent A Car (Los Angeles), and Triangle Rent A Car (Charlotte).

The best part of this conference for me was finding the man himself, fleet industry legend Ed Bobit, in the exhibition hall on the first night. An honor and a privilege, once again, to talk fleet industry news with the person who, it can be said quite accurately, created the fleet industry media (print, conferences, Web); very few could claim such an accomplishment in this or any other industry, but then again, there are very few the likes of Mr. Bobit… Thanks for another great show, as always, no sooner does this one end, then I look forward to the next one.

Bobit Media & Driveitaway Crews +

2007-05-30T09:33:00.000-05:00

Vol. 3 No. 10

Wharton Reunion 2007
(a first….a short blog entry that has nothing to do with cars)

As the last entry, on the 2007 NAFA Conference, highlighted its 50th, “Golden Anniversary,” I thought maybe it would be fitting to mark a small anniversary of my own recently. The University of Pennsylvania’s Wharton School Reunion 2007, was held during Penn’s graduation weekend, May 10th – 13th, and this year, for the first time (as an old alumni), I was honored to be asked to on one of the panel presentations, “The Entrepreneur’s Perspective – Lessons from Wharton Alumni.”

Now, I’m not sure what lessons I could give to a very bright audience filled with students and accomplished alumni entrepreneurs, but it was very interesting listening to the other two panel members: Jerry Turner W’57, founder of American Sporting Goods (maker of Avia, Turntec and AND1 brands) and Brandon Watson, WG’97, founder of IMSafer, Inc. The moderator, Bob Chalfin, W’78; WG’78, J.D. C.P.A, a Lecturer at Wharton,and President of the Chalfin Group, an accomplished entrepreneur and author in his own right, was equally informative and fascinating to listen to, so I was very, very pleased to be included in this panel. Being an experienced teacher at Wharton, Bob had the insight to override normal panel discussion type dialogue and jumped right into asking each of us just three questions, before turning it over to audience questions. The three questions for each of the panel members were: what were our three biggest mistakes, our three biggest successes, and our three biggest regrets… Revealing enough questions, of course…

In listening to the two accomplished entrepreneurs with me on the panel, each one kind of equidistant from my age in opposite directions, Jerry older and Brandon younger, it struck me that sometimes as an entrepreneur, we tend to get isolated and myopic in our struggles, and think that we travel a unique road of experiences. In fact, though our businesses where quite different, and ages were far apart, the fundamental elements of each of our experiences were quite similar. So the essence of an entrepreneur, that is, a few things expressed by each of us in different examples on the panel, can perhaps be distilled down to a few observations:

- Security and entrepreneurialism are, to be frank, opposite endeavors, at least until you retire or die… It doesn’t matter how big or how successful your enterprise, the essence of being an entrepreneur is an educated risk, we all have our neck on the line, every day, only the size of the “bet” (and the perks) get larger and more robust. I think Jerry described this best when he recounted how Phil Knight (founder of Nike), who had been an old friend and business client of his from the time Knight began in business, (and struggled with cutting a $10k check), answered his question of how it feels be running “a $10B company as opposed to a $10M company?” Knight answered, “pretty much the same, except for more zeros…” There were, indeed, many accomplished entrepreneurs in the audience as well, and we all echoed the same thing…even when conditions, and the banks and finance types, let us take a few chips off the table it is not the nature of the beast to head for security…the spirit to create, to build, to leverage, to be active in doing something different and in a different way, contradict the “clipping coupons” mentality, which, of course always requires personal risk, both financial and other kinds…

- Entrepreneurs are survivors. What may seem contradictory to the above perspective on security is not really, as, by definition, entrepreneurs are adaptable and always have a “back door” way to stay in the game and survive, even when the “worst” happens (and it usually does, at one time or another, to most entrepreneurs - I’m reminded of reading about Rupert Murdoch & News Corp’s very close brush with financial collapse a long time ago, when an entire financial workout agreement was held up and put in jeopardy by one small Pittsburgh banking institution, with the company’s continued existence in the balance…). I don’t think entrepreneurs, even very successful ones, are smarter than anyone else, but I do think they have an uncanny ability to adapt and survive, “until the wheel comes around.” One remembers that before the Internet boom of the late nineties, AOL was nicknamed the cockroach, as it changed its business model so many times just to survive before it hit the “wave” (remember it started out as a private, non-Internet based, network for gamers…), and more recently, "Paypal" started as a software encription firm. I think what Darwin said holds true for entrepreneurs, “It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change.”

- Of course, hard work, determination, endurance, planning etc., are all necessary ingredients to entrenprenurial success, however, in each case as well success (and failure for that matter), is at least half luck, no matter how you look at it. A very wise (and successful) entrepreneur once told me that, way back when I was an undergraduate student at Wharton (along with the statement, “anyone who tells you different either isn’t an entrepreneur or is intentionally telling you a lie”). I’ve found many, many examples which verify the truth in the statement. I once heard (from a reliable source) that IBM as much chose Microsoft as its vendor for DOS (its second contender) because the front runner vendor made the IBM executives who paid an onsite visit wait too long to see him…so IBM chose the second in line…and the rest, as they say, is history.

I immensely enjoyed the panel and the experience, and was fortunate enough to take in some of the other presentations and receptions while I was there; it was, as expected, quite an event. I’ve always been kind of in awe of the whole “Pennstitution” thing itself, from the first time I set foot on the large city center campus, through the seven years I spent in two schools, and now way after I left it all. The people, of course, make the over 200 year old institution and it still contains the most talented group (students, alumni, affiliates, etc.) I’ve ever met, although I may be a bit biased in that regard. It’s no mystery why I’ve been in business with many of my former classmates and other alumni, why I look for Penn interns, and have kept an office in the “Science Center” just outside Penn’s “University City” for many years. The environment and its community have always managed to keep even my poor brain active, which is quite an accomplishment…

** A FOOTNOTE: when I was leaving from the presentation, a gentleman came up and said that he liked what I said, and that he had seen me before in a former talk I did at Wharton. We started talking and it turns out he is the co-founder of one of the hottest new start-up properties in Silicon Valley-- Spock (a company on which I had just read great detail in the Wall Street Journal), funded by big VC names like Clearstone Venture Partners and Opus Capital Ventures. Spock is a company that is destined to revolutionize “personal search” in a way untouched by search services like Google. Currently in “invitation only” launch, it already has over 100 million peoples’ information indexed, with millions more added every day. With the caliber of people like that in audience, I can’t help but feel that maybe our places should have been reversed. In any event, I ask, how can one’s brain or enthusiasm not be charged in the company of such folks?

2007-05-17T15:30:00.001-05:00

Vol. 3 No. 9

NAFA Conference 2007 “Experience Golden Opportunities”

“Experience Golden Opportunities” was the theme of the 2007 National Association of Fleet Administrators (NAFA) annual conference, May 5-8th at the George R. Brown Convention Center in Houston, Texas. This celebrated NAFA’s 50th year as an organization…and this marks my 21st annual NAFA Conference (I must have been under age when I attended my first few…). With its 90+ hours of fleet workshops and professional development seminars, NAFA once again presented more educational opportunities than any other fleet industry related event, and, once again, the exposition floor was filled with over 230 exhibitors. Of course, in addition, there were plenty of evening events for networking and socializing.

Led by incoming NAFA president Gayle Pratt, Manager, Purchasing & Fleet Services, Ecolab Inc., and Phillip Russo, CAE, the Executive Director of NAFA, the conference kicked off with an inspiring presentation by keynote speaker, Gordon Bethune, Chairman of Aloha Airlines, former CEO of Continental Airlines, and the author of the boook From Worst to First: Behind the Scenes of Continental’s Remarkable Comeback. Bethune is credited, along with his management team, with saving Continental from extinction with his “Go Forward plan,” to fix the problems of employee morale, the quality of the product, and the route structure, among others.

This Year: A Proposed New Name for the Organization, Reflecting an Expanded Mission

A first in its 50 year history, this year the Board of NAFA proposed to all that it adopt a new name for the for the organization, to be known going forward as the Fleet Management Association. Marking a multi-year evolution in branding, rather than a revolution in its mission, the name change reflects the expanding and expansive roll NAFA now plays in being the association for the management of vehicles, which includes various specialties such the Fleet Management Institute and the Law Enforcement Group, and an international constituency, with Canadian fleet manager members, etc.

Whether NAFA or FMA, the days of the conference were once again packed with seminars and workshops, with topics both specific to fleet management, such as, “Life Cycle Cost Analysis” or, “Anatomy of a Fleet Contract: What You Need to Know,” to more general business topics, such as, “Creating an Effective Business Plan.” Also, there were the annual topics updated, from “Medium and Heavy Duty Truck Emerging Technologies,” to “Canadian Truck Legislation,” to “Future Vehicle Technologies.” The manufacturers, General Motors, Ford, and Daimler Chrysler, all made presentations on product updates for law enforcement vehicles, and there were sector-specific workshops for corporate, utility, pharmaceutical and public service fleets, to name a few. I didn’t see anything this year on the roster specific to vehicle remarketing…and, as depreciation is still the single largest vehicle expense outside of fuel, of course, I was a bit disappointed on that score.

As always, the Fleet Exposition hosted an area of creative booths with a varied list of vendor services, from vehicle manufacturer displays to booths from the major fuel companies, from corporate fleet lessors to GPS navigation vendors. The expo included over 230 vendors in all, with contests, giveaways and candy, of course.

Chris Brown of Bobit Media withDavid Wurster & David Freed from ViNCENTRIC

As usual, the Affiliates and Manufacturers organized a great nighttime event to open NAFA-- a party befitting the surroundings. NAFA hosted “A Taste of Texas,” Sunday night, at the closing of the first day of the conference. And once again the NAFA folks hosted a semi-formal closing reception and dinner (fondly referred to as the “prom”). And of course, one night is always left open for the large corporate lessors to host individual receptions and dinners for their clients.

…And the Winner Is…

Every year at the NAFA Convention, a number of annual awards are given to the best and the brightest in the fleet industry. This year, Walter Burnett, CAFM, joined the elite club of NAFA members that have been awarded the “Excellence in Education” award. Walter is only the fourth member in the fifty year history of NAFA to receive this honor, which recognizes superlative dedication, leadership and personal sacrifice. In presenting the award, NAFA Senior Vice President Chris Amos said of Walter, “His selfless efforts have touched hundreds and hundreds of peers and helped to raise the professionalism of fleet management…in short, he is what excellence in education is all about.” Congratulations Walter, for an award well earned.

Automotive Fleet’s 2007 Fleet Manager of the Year: Lynda Dinwiddie

Although Automotive Fleet Magazine’s Fleet Manager of the Year and Fleet Financials Magazine’s Fleet Executive of the Year awards are not part of the official NAFA schedule, it is a fact that these annual awards are the most revered honors in the industry. Always revealed at a brunch on the Sunday morning marking NAFA’s first full day kick-off, I’ve had the honor of attending this event every year for a long time – it is one of those annual events I wouldn’t miss.

This year the Fleet Manager of the Year was chosen from 13 candidates, which, in turn were whittled down to three finalists before the final award recipient was selected.

Congratulations go to Lynda Dinwiddie, Associate Vice President, Fleet & Travel, Laboratory Corp. of America, the 2007, 23rd annual Fleet Manager of the Year award recipient, sponsored by Automotive Fleet Magazine, Wheels, Inc. and the Automotive Fleet and Leasing Association. Dinwiddie, an eighteen year veteran in fleet management, was recently promoted to Associate Vice President of LabCorp, and manages a staff of four and a 4,300-vehicle courier fleet with an annual per vehicle average of more than 50,000 miles. Among Dinwiddie’s fleet accomplishments, she has decreased effective monthly depreciation by $114 per vehicle annually over the past five years through cost management, decreased out-of-stock purchases, and maximized resale values by generating 40% driver and employee sales (an important statistic for companies like Driveitaway.com, I might add). She also lowered depreciation and overall cost per vehicle over the past three years by starting the “fall” ordering cycle in late June. Finally, Dinwiddie successfully introduced an online fleet safety program and rewrote LabCorp’s automobile policy manual.

Fleet Financial’s 2007 Fleet Executive of the Year: Vic Stewart

Congratulations are also in order for Vic Stewart, Vice President, Corporate Purchasing, Advance Auto Parts, for winning Fleet Financial’s 2007 Fleet Executive of the Year award, sponsored by CEI. Steward manages a fleet of 7,200 vehicles and supervises a fleet staff of 15. In 2006, for the second consecutive year, Stewart led his corporate purchasing/fleet team to a negotiated savings target of more than $20 million, achieving $24 million in annualized savings, 40% of which was fleet related. His fleet grew by more than 18% in 2006, from 6,100 units to more than 7,250, with no staff increase. He executed an equipment purchase-leaseback that generated over $3 million in revenue for Advance Auto Parts in the fourth quarter of 2006. Stewart also worked with the company’s AAP risk management and commercial sales teams to develop and implement a safety program, which resulted in a 10% reduction in accident claims per commercial delivery truck in 2006 versus 2005, an operating cost avoidance of more than $2 million.

Government Fleet’s 2007 Public Sector Fleet Manager of the Year: John Clements

John Clements accepting his award

Finally, congratulations are in order as well for John Clements, Fleet Operations, San Diego County of California, Government Fleet magazine’s 2007 Public Sector Fleet Manager of the Year, sponsored by Automotive Resources International (ARI) and Fleet Counselor Services.

Bravo to Lynda Dinwidde, Vic Stewart, and John Clements for winning the most prestigious awards in this business, and thanks to all of folks at Bobit Business Media for inviting us, once again, to this fantastic brunch and the awards ceremony.

The grand evening event to close the first full day of NAFA, as always, was well attended. A good time was had by all, as the country music played and guests dined on “Texan” cuisine. Some even pulled out their cowboy hats and cowboy boots in honor of the occasion! Upon the conclusion of the “Taste of Texas,” NAFA attendees spilled out into the hotel bar to continue mingling and catching up with old friends. Although packed with beneficial educational seminars and workshops, I think most can agree that some of the best times are spent networking at the social gatherings.

See Ya'll Next Year

Next year the 51st National Association of Fleet Administrators annual conference will be held in Salt Lake City, Utah. Well folks, until then it’s been fun….

Demetra Markopoulos, Driveitaway, on the Exhibit Hall Floor

2007-05-01T09:13:00.000-05:00

Vol. 3 No. 8

April 3 – 5, 2007: The New York International Auto Show, the JD Power Roundtable and the Morgan Stanley Global Automotive Conference – Part II.

I have to admit, I spent most of my time the second day of the Morgan Stanley Conference, which coincided directly with Preview Days of the New York Car Show, indeed, at the Car Show. Since both of these big time events where happening simultaneously, it was impossible to take in both at the same time, although I would have liked to been able not to miss either one.

The second day of the Morgan Stanley Conference began with a full group presentation by Frank Witter, the CEO & CFO, Volkswagen America & Volkswagen Canada, and then went back to having two concurrent sessions, one room hosting: John Plant, President & CEO, TRW Automotive Holdings, Jean-Dominque Senard, CFO Michelin, Timothy Manganello, Chairman &amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp; CEO, BorgWarner; while the other room hosted presentations by Magnus Lundquist, CFO, Autoliv, Inc., SidDeBoer, CEO, Lithia Motors, Inc., and Phil Weaver, VP & CFO, Cooper Tire & Rubber Company.

The group got together again just before lunch to listen to Bob Carter, Group Vice President & General Manager of the Lexus Division of Toyota, and then the lunch presentation was a dealer panel moderated by, of course, Charlie Vogelheim from JD Power (you knew I was going to say that). The dealer panel, purposely made of only privately owned large dealer groups, included DCH, Mile One (both large enough to be included in Automotive News’ “Top 125 Dealer Groups” in the country, but were not listed because each declined to reveal their exact gross numbers); and an old acquaintance of mine from Long Island City, Bruce Bendell, from Major Automotive Group. (I’m old enough to remember that, at one time in the past, Major was actually a public dealer group).

The shortened afternoon (so folks could spend some time on the last Preview Day of the car show), had another set of “dueling” presentation, one by Mark Igo, Vice President & General Manager of the Infiniti Division of Nissan Motor Company, and the other by Donald Johnson, Chairman, President & CEO, Aftermarket Technology Corporation.

The second day of what I think was probably the most comprehensive automotive analyst conference of the year, wrapped up with a final presentation by Tom Libby, Analyst & Director of JD Power’s Power Information Network, with a summarized version of his annual Automotive Franchise Assessment. The Morgan Stanley Global Automotive Conference had presentations by over 29 different companies in two days, quite a first class event, and definitely not one to miss if you follow the automotive sector closely.

Now On to the CAR Show…

Understand, just because I don’t go into as much car detail as my esteemed colleague did on her guest writer blog entry on the Chicago Auto Show a couple of months ago, doesn’t mean there weren’t as many (or more) fascinating cars and exhibits, it just probably means her observations and writing talent is more detailed and thorough than mine. I like to just hit a few of the highlights and make some broad observations, and will spruce it up with some of her pictures interspersed in the text (you can tell they are her pictures, there is no lack of Ferrari and Lamborghini shots…).

First, the world debuts, exclusively shown for the first time at the New York International Auto Show.

World Debuts, Production Vehicles:
2009 Ford Flex (the new three row crossover introduced by Mark Fields and Alan Mulally the morning of the first preview day of the show)
2008 Ford F-150 Chip Foose Edition
2008 Ford Mustang KR (another venture with Carroll Shelby)
2008 Ford Expedition Funkmaster Flex Edition (no explanation required I hope)
2008 Honda S2000 CR
2008 Infinit G37 (a coupe version of the best selling G35)
2008 Jeep Liberty
2008 Lexus LX 570
2008 Mercedes-Benz CL65 AMG
2007 Nissan 350Z Nismo (on sale in July)
2008 Subaru Impreza
2008 Subaru B-9 Tribeca

World Debuts, Concept Vehicles:
Chevrolet Trax minicar +
2 Other Chevrolet minicars
Now, after the unveiling, you have the opportunity to pick your favorite concept of these three, by going to www.vote4chevrolet.com and casting your vote (after seeing all three in person, I’d abstain...but that’s just me)
Hyundai Genesis Sedan
Infiniti EX Crossover (the car has a liquid crystal glass roof that can turn translucent to shield passengers from the sun, or curious onlookers…neat but for some reason I if I had it, I think it wouldn’t work right, but again, that’s just me…)

Green is nice but Power Rules - or as the Wall Street Journal Titled it: “Horsepower Nation: New Car Models Boast Speed, Size, Power While Washington Buzzes About Biofuel, At New York Car Show, Big is Beautiful”

So the fashion is everything “Green” these days, with Hertz even promoting a line of “Green” (hybrid, fuel efficient) labeled cars to rent, I just today noticed when I jumped on their site to rent a car, but you certainly wouldn’t know it from the vehicles featured at the New York International Auto Show this year. Yes, Toyota had its 34 miles per gallon Yaris, and its hybrid Prius sedan, etc., and General Motors even showed for the first time its trio of concept “mini” vehicles that consumers can vote on for popularity (see “World Debuts, Concept Vehicles” above), but the watchword and theme of the show was clearly big, in-your-face horsepower, as the Wall Street Journal suggested in its story April 5, with the headline above.

Case in point, in addition to the Mustang muscle car, the Shelby GT500KR, with a 5.4 liter supercharged V8 engine that does 540 horses, Ford also showed off their F-150 Foose custom pick-up designed by Chip Foose, also powered by a supercharged V8 that does 540 horses and 500 pound feet of torque. DaimlerChrysler premiered its Mercedes’ CL65 AMG with its 6 liter, 604 horsepower, V12 engine…better line up quick if you want one of these creatures though, as Mercedes says it will limit worldwide production to 40 units, including 18 slated for the US. To complement the CL65 AMG, however, Mercedes will make a CLK63 AMG Black Series, a “street legal” version of a race car, that has a 6.3 liter V8 engine with 500 horsepower (heck, seems to me the F-150 Foose pick-up could leave it in the dust).

Of course, GM wasn’t only thinking “tiny tots” at the show; they also premiered a pair of Buick “Super” cars with V8 engines that offered 300 horsepower, and a new production version of the Hummer H3 sport utility vehicle with a 295 horsepower V8.

So this all reminded me a little bit of the Hollywood types that are photographed driving a Prius around town, but in their garage have exotic sports cars withenough horsepower to blow the doors off of cars you and I drive. Or, more prosaic was Mike Jackson’s, (CEO of AutoNation, the nation’s largest publicly traded dealership chain), observation as presented in the Wall Street Journal, that fuel efficiency has consistently ranked behind cup holders and sound systems in consumer desires over the past 20 years.

And, finally, move over biofuel, in the spirit of alternative fuels and energy conservation, they have invented a vehicle that runs entirely on chocolate..."M & M's" to be precise. Not only does it not require foreign oil but, take it from me, "fill-ups" are much more desirable...

Okay, not really, its just the result of my Ferrari crazed colleague's need to take a candy break at the giant "M & M" store across from the hotel that housed the Morgan Stanley Automotive Conference - the shot is of the "M & M" sponsored rase car on display inside the amazing three story "house of chocolate."

...At Night, Wonderful Event Highlighting a Fantastic Cause (More Evidence, Once Again, that “Car Guys” are Still the Best)

As mentioned above, since my esteemed (Ferrari obsessed) colleague, Demetra Markopoulos, has a writing talent and eye for observation more detailed than mine, so, under the prescripts of noblesse oblige, she penned the comments below on the 5th Annual Volvo Charity Gala

Thursday it was back to Cipriani for the 5th Annual Volvo Charity Gala. Known as the “The Volvo for Life Awards,” the event began in 2002 to recognize and honor the outstanding achievements of individuals in Safety, Quality of Life and Environment. A winner is chosen in each category to receive $50,000 to be donated to a charity of their choice, along with a trip to this event, where they are featured in a Volvo for Life Awards heroes documentary. At the conclusion of the ceremony, the Grand Winner is announced, and is the recipient of a “Volvo for Life,” meaning they receive a brand new Volvo every three years, in addition to the above.

Cipriani’s was elegantly decorated, had a plethora of good things to eat and drink, and swarming with VIP’s —including top executives, honorees and several of the judges, by the time we arrived. This year’s group of judges included: baseball legend, and humanitarian, Hank Aaron; heart surgeon, and founder of the Ethiopian North American Health Professionals Association, Dr. Ingida Asfaw, M.D.; Volvo for Life 3rd Grand Award winner, and founder of the Limbs of Hope Foundation, Hope Bevilhymer; star athlete, Olympic Gold Medal winner, and renowned politician, Senator Bill Bradley; attorney, chief fundraiser for NYC schools, co-founder of the Profiles in Courage Awards, mother, and daughter of John and Jackie Kennedy, Caroline Kennedy; film actor, and UNESCO Ambassador, Val Kilmer; artist, architect, and creator of the Vietnam Veterans’ Memorial, Maya Lin; actor, activist, and food conglomerate founder, Paul Newman; physicist, astronaut, and the first woman in space, Dr. Sally Ride; Volvo for Life 2nd Grand Award winner, and founder of the Baychester Youth Council, Earnestine Russell-Drumgold; humanitarian, and founder of the Special Olympics, Eunice Kennedy Shriver; and Volvo for Life 1st Grand Award Winner, and founder of the Red Feather Development Group, Robert Young. Everyone was waiting in anticipation for this year’s winners to be announced.

The event began with an introduction by Anne E. Belec, President and CEO of Volvo Cars of North America, LLC and was hosted for the second time by the Emmy-nominated actor and producer, Benjamin Bratt (widely known as Detective Ray Curtis in “Law and Order”) After addressing the crowd, Bratt announced the first two awards of the evening, the Best Buddies and the Alexandra Scott Butterfly Awards.

The Best Buddies program was created to “enhance the lives of people with intellectual disabilities by providing opportunities for one-to-one friendships and integrated employment.” Volvo honored a pair of friends, Brian Von Eiff and Brad Worrell, who committed their time not only to Best Buddies, but to each other. These two high school students from Carmel, IN, did an exemplary job in representing the mission of the organization, tremendously increasing participation in the program, and thus becoming great assets to Best Buddies.

Winner of this year’s Butterfly Award, was Samita Mohanasundaram. This 15 year old girl strives to give back to her community in more ways than can be imagined, well beyond her years. She volunteers her time to teach literacy to children in India, is a very active member of the Make-a-Wish Foundation, and has already put in over 870 hours of time into community service.

Created in memory of Alexandra Scott, the Butterfly Award goes out each year to honor a child hero, who- “like Alex-- helps make the world a better place.” Alex was a little girl, in the Philadelphia suburbs, that was diagnosed with cancer at age one. By the time she was four years old, she understood that other little kids had cancer just like her, and so she began a lemonade stand to raise money for cancer research. From its humble beginnings in Philadelphia, it wasn’t long before “Alex’s Lemonade Stand” had become an international effort, as children from around the world began their own lemonade stand fundraisers. In August of 2004, at the age of 7 years old and having raised over $700,000, Alex lost her battle to cancer. By the end of that year over $1.5 million dollars had been raised for Alex’s Lemonade Stand Fund.

This year’s Volvo for Life winner in the Environmental category was Eli Kahn, a 14 year old survivor of cancer. If he could survive the battle, Eli vowed to dedicate his time to cancer research, and in doing so, he founded the “Cartridges for a Cure.” The objective of this program is for individuals, organizations, and businesses nationwide to recycle their used ink jet and laser printer cartridges. Once turned in, the recycling company sends Eli a check, which he donates to John Hopkins to support pediatric oncology research.

Paula Lucas was the recipient of the Volvo for Life award in the category of Safety. She is responsible for creating the American Domestic Violence Crisis Line organization. Paula lived in the Middle East with her children, where they were victims of severe domestic abuse, having nowhere to turn for help. Upon their risky escape to the U.S., they were forced to start over in poverty. Despite the hardship and adversity, Paula was determined, and thus succeeded in creating this organization, where other victims in crisis overseas, much like her, could turn to for support.

Quality of life is often taken for granted by many of us in this country, who often don’t take the time to appreciate our blessings until we are made aware of the lives of those less fortunate. For me, this was the case when hearing the story of Rose Mapendo, the Volvo for Life Grand Award Winner. A pregnant Rose, her husband, and her eight children were imprisoned by the Congolese military, where she was forced to watch her husband’s torture and then execution. Her amazing courage and strength allowed her to persevere and eventually give birth to twins, while imprisoned. Finally, after sixteen months of brutality, Rose and her family were transferred to a refugee camp, where they were rescued and brought to the U.S., settling in Arizona. After learning how to read, write and drive, Rose has dedicated her time to Mapendo International, (in collaboration with the UN and US Department of State), named in her honor, to care for, protect, and rescue other African refugees.

Subsequent to the awards’ ceremony, guests were entertained by Sweden’s The Soundtrack of Our Lives, Kaissa, an African singer, and the Tommy Castro Band from the Bay Area. The honorees mingled with the attendees, and a great time was had by all. It was a tremendous event, overwhelming in fact, in experiencing in the remarkable and heart-touching stories at the 5th Annual Volvo for Life Awards. I don’t think anyone that attended could help but be moved by the occasion. I can think of no better way to end a very busy and substantive couple of days in the city that never sleeps…

2007-04-23T10:27:00.000-05:00

Vol. 3 No. 7

April 3 – 5, 2007: The New York International Auto Show, the JD Power Roundtable and the Morgan Stanley Global Automotive Conference – Part I.

Although Philadelphia is really a stone’s throw away from “the City” as it’s called, the sad fact is that I get there much less often than other cities in the US, as work travel seems to put me more frequently in the sunbelt areas. I’m not complaining on that score, but to my way of thinking there really is no place in the world like New York City. So I’m glad that at least once a year there is a combination of excellent car events that are too good to miss, and, ironically enough, the three don’t have anything directly to do with each other except, in fact, they are car events and, of course, all “car guys” will be at the same venue -- that is, in New York City for the annual right of Spring, the New York International Auto Show.

Although the weather didn’t seem much like Spring, as it was cold and snowy on April 3rd when I got into town, and, I think New York had record cold temperatures by the end of the week, the events were hot – from the J.D. Power Automotive Roundtable, to the two day Morgan Stanley Global Automotive Conference, to, of course, the Preview Days of the New York Auto Show (running simultaneously with the auto conference). Additionally, and unrelated to any of the above but filled with folks I had seen for the prior two days, the 5th Annual Volvo For Life Awards Gala, a fantastic event sponsored by Volvo for a very worthwhile and unique charity drive.

I have to admit, I didn’t attend much of the J.D. Power Roundtable this time, as it was mostly geared towards retail dealers: “Opportunities for Sub Prime Financing,” “Rejector Study Overview and Update,” and “Annual Franchise Assessment” were the topics of the day. I enjoyed Charlie Vogelheim’s co-hosting of the Wall Street Journal Awards, honoring “the 2006 leading automotive stock performances” on the first night of the automotive conference, along with his hosting of the conference lunch on the second day which featured a private automotive retailer panel discussion.

The trip really started for me on Wednesday morning, at the Morgan Stanley Conference kick off, with Mark LeNeve, GM’s North America Vice President, Sales, Service & Marketing, addressing the audience of equity analysts, hedge fund managers and reporters. He was followed up afterward with two concurrent sessions running right up until lunch – with one room hosting, Phil Martens, President Arvin Meritor, Iku Mori, President Fuji Heavy Industries, John Mendel, Executive Vice President, Honda, and Roger Penske, CEO of United Auto Group, and the other room hosting presentations by Tony Gallagher, the Chairman, President & CEO of Genuine Parts, Darren Wells, the Senior Vice President of Goodyear Tire & Rubber, Earl Hesterberg, President & CEO of Group 1 Automotive, and Steve Roell, Executive Vice President and Vice Chairman of Johnson Controls.

Roger Penske, One of the Best Dealer “Car Guys” in History

While all of the presentations were first rate, in this old line auto retailer’s opinion, nothing is better than a presentation by the legendary Roger Penske. Penske is one of my personal heroes in this business, having tremendous success with over a dozen major automotive enterprises outside of his racing triumphs – if there is a more successful retail “car guy” I’ve never heard of him. In addition to presenting the outstanding results of the United Auto Group since he took it over from the Marshall Coogan team (United Auto is the second largest dealership group in the country, and, Penske Automotive Group, run by Roger’s son Greg, is the 11th largest automotive group in the country, and controls one of the largest single point stores in the nation, Longo Toyota in southern CA), Penske outlined the concept of growing “organically” through creating destination auto malls, as well as through acquisitions. The idea that the service and parts side of the business creates the best margins and reoccurring revenue is not new in itself, nor is the idea that service creates sales (that’s what we counted on in our small store and, implementing this on the fleet side of the business created our tremendous growth), but the large scale implementation in destination stores, as exemplified in United Auto’s new Turnersville complex near my home town of Philadelphia, is nothing short of groundbreaking, and does set the bar higher for all competitors.

Given that the location of the Turnersville complex is quite close to where I was a car retailer, I’ve followed that particular store group from the beginning: when it was innovatively created as a combination of franchises and stores as founded by the late, insightful Martin Lustgarten (under the “Martin Group” logo) in the late eighties, to its purchase by the “Classic Group” of stores in the mid nineties, to ultimately, the Classic Group’s purchase by United Auto. I saw it transformed by Penske from a large group of franchise and “rooftops” all in the same place (but so much like other large automall properties now prevalent in major cities and suburbs), to a trulyorganized and “over the top” state of the art, automotive retailing facility that it is today – complete with a vehicle test track for interested prospects. I forgot the exact number of additional service customers Penske quoted that the new Turnserville complex garnered its first year or so of operation, nor do I remember the exact percentage of “conversions” the store made, (that is, the number of service customers that bought their prior vehicle at another dealership but bought a new or used one at the Turnersville complex after going there for service), but I do remember both of those numbers were significant and portend the underlying intelligence of such an investment, and perhaps, indicate the very direction of automotive retailing itself.

On the latter point above, one fact Penske did identify, and that speaks volumes, I think, into where automotive retailing as an industry is heading, lies in the “Opportunity for Further Consolidation” statistics he presented, that compared automotive retailing consolidation with other specialty retailing categories. It seems that the top 10 industry players in the United States, as I remember it, control 45% of the consumer electronics sales in this country, 36% of the home improvement sales, 25% of the “off-surplus” category, but only 7% of the new vehicles retailed in the US. With this statistic, it’s obvious that there is much more room for consolidation in the car business. One shouldn’t lose site, however, of the fact that back when I was a retailer (and it wasn’t that long ago even now), the top 100 players controlled less than even a few percentage points of the total new car sales volume, and, well, it was said back then that the percentage couldn’t get too much larger, as the manufacturers would prohibit concentrated market share. I think what has happened since (and continues to happen), with the consolidation of the industry, says as much about the economic distribution efficiencies of retail consolidation for all of the vehicle manufacturers as it does for Wall Street and the efficiencies of the consolidators.The manufacturers may not want to give up this control to their retail distribution “partners,” but in this new automotive age where the product market share of any one manufacturer is decreasing dramatically (I remember when what GM said in their franchise agreement, when they had 40% market share, pretty much dictated what other manufacturers franchise agreements would prescribe), it allows for the large automotive retail groups with sophisticated capital and management to increase their individual market share, and further consolidate the retail automotive market. (The manufacturers don’t have much of a choice but to support this consolidation, as it is to their economic benefit, even if they give up some of the control leverage over dealers that they once had). Interesting business this car business these days…

A Slideshow Lunch, then a Presentation by the “Non Car Guy” Most in the Spotlight These Days (but a $28M Paycheck for the First 4 Months is Worth a Little Heat…)

The lunch presentation was by John Davis, the Producer, Host & Creator of Motorweek and also who, for any of you that follow this blog, know was the keynote speaker at the Automotive Fleet & Leasing Association’s annual conference last September. Davis, with his own unique narration, presented a ton of slides of new model vehicles on display at the Detroit and Geneva International Auto Shows earlier in the year, and/or at the New York Car Show down the street. The lunch was so popular that they had to scurry to add extra tables.

After lunch, a much anticipated presentation was made by Alan Mulally, the new President & CEO of Ford Motor Company. Fresh from Boeing and new to the car business, Mulally is the turn-around expert that was brought in by Bill Ford to literally save the company. Mulally has since mortgaged everything at Ford, or, as he describes, took out the world’s largest “home improvement loan,” for the $28B in cash needed to set the company right. Judging from the response of the audience, and his own confident and deliberate style, it certainly seems like everything is on the right track for a dynamite recovery, but, I would be incorrect if I said there still wasn’t major concern about the strategy of “downsizing” Ford’s way to success. I’ve always believed what Lee Iacocca said when turning around Chrysler Corporation from near fatal collapse in the early eighties, that it’s the product (that is the car) that turns around a car company. Mulally seems to recognize this though, so we shall see…(again, interesting business this car business these days…).

Yes, Mulally’s pay packet as CEO was a whopping $28M for the first four months of work, but to be fair a lot of that was to replace what he gave up for leaving Boeing, after his long career there…it broke out as follows: $666,667 in salary, bonuses totaling $18.5M, an $8.68M expense for stock options and other stock related rewards, and $334,433 for required use of the corporate aircraft, relocation costs, and temporary housing. All and all, it doesn’t look like Mulally’s financial neck is on the line whether or not his turn around plans for the company succeed or fail (not quite the same for the hundreds of thousands of factory workers, vendors, or franchise dealers and employees that hang in the balance).

After Alan Mulally’s presentation, the program went back to a dual conference format, with presentations from: Yogendra Rahangdale, President & COO of American Axle & Manufacturing, Gregg Sherrill, Chairman & CEO of Tenneco, Inc., Sylvie Rucar, CFO of PSA Peugeot Citroen, and Vicent Galifi, Executive Vice President & CFO of Magna International (one of the companies on the “short list” to buy Chrysler). The conference brought everyone back together at the end of the day, for a presentation by George Murphy, the Senior Vice President, Global Brand Marketing for Chrysler Corporation (by the way, here’s a gratuitous plug: if anyone wants some “almost new” ’05 or ’06 Chrysler Crossfires, Coupes and Convertibles, at steal’em prices, go to our Driveitaway.com transaction site for retail buyers at http://dealers.driveitaway.com ...you'll find four or five hundred available) .

…And to Close Out the First Day, The 2007 Wall Street Automotive Awards Dinner

The Morgan Stanley Global Automotive Conference finished up its first day with a first class Wall Street Automotive Awards dinner, held at the fabulous Cipriani in Manhattan.

Award Presentations were as follows:

Best Automobile-Related Company Stock Performance in 2006:
ArvinMeritor

Best Global Automobile Manufacturer Stock Performance in 2006:
Fiat

Best Domestic Automobile Stock Performance in 2006:
General Motors

Best Automobile Dealer Stock Performance in 2006:
Group 1 Automotive

A few panel discussions went on throughout the dinner, with press luminaries Joe White from the Wall Street Journal and, of course, everyone in the car business’s favorite crowd pleaser, Charlie Vogelheim, as co-moderators.

All in all, it was a great close to a jam packed, high profile, New York City type “car guy’s” day.

Next, Part II, and Cipriani’s Once Again…

2007-03-26T09:16:00.000-05:00

Vol. 3 No. 6

The IARA Roundtable & the 12th Annual Conference of Automotive Remarketing (CAR)

Although going back to Las Vegas so soon after the NADA Convention was even a bit soon for me, I, of course, looked forward to the annual Bobit Media Group event that elaborates on our niche in the car business, the grand daddy of all vehicle remarketing conferences, the Conference of Automotive Remarketing (CAR); held again this year at Caesars World, February 27th through March 1st. The Bobit folks were the first to recognize that the “art and science” of vehicle remarketing deserved a conference of its own back 1995, and I think it would not be inaccurate to say that it marked the dawn of a the new level of sophistication and technological advancement for the remarketing industry, the momentum of which continues to this day, which helped bring about companies like Driveitaway.com.

The IARA Roundtable Series

Once again, CAR itself kicked off officially at a reception the night of the 27th, but was preceded by the semi annual International Automotive Remarketers Alliance (IARA) Roundtable held that day. The IARA Roundtable meeting started with their annual “Circle of Excellence” award lunch, with a update on the new ambitious and impressive remarketing certification program IARA has created, and then, back by popular demand, a keynote address by Jim Hallett, still President of the Columbus Fair Auto Auction this month, but (if things go as planned) soon to be the President once again of the new privately owned Adesa Auction group by next month – Adesa is the company that Hallett originally grew into the second largest auction chain in the United States. Jim’s talk, once again, was insightful as to the future developments in the industry, and frankly, if there is a more dynamic character in this entire remarketing business, I have yet to meet one. The positive momentum of change that Jim will no doubt drive with his new (old?) platform I think will be beneficial for the entire industry and move things forward at a rapid pace…and it will be exciting to watch as well.

Unfortunately, the winner of this year’s Circle of Excellence Award could not be present to accept it. Warren Young, really one of the creators of the entire modern vehicle auction industry and no less than an industry icon, won the prestigious Circle of Excellence Award this year, but couldn’t make it out to the lunch. I’m sad to say I’ve only met Warren a couple of times, although, like anyone who has accomplished as much as he has in this business over the years, I’ve heard so many good stories about him and his achievements I almost feel like I know him. Hearing more about his activities at the luncheon award was very interesting.

After the IARA award lunch, came the roundtable presentations, one on “IARA Reconditioning – Methodology for Tracking Results” and the other on “Remarketing Salvage Vehicles.” The criteria for reconditioning is always a debatable topic, various sectors of the fleet business have varying views on “how much and when,” so it’s always good presentation when various sectors present the reasoning behind their policies. Also, while I do claim to have some knowledge on most topics that concern remarketing, I don’t know much about the remarketing of salvage vehicles, its almost a niche within a niche, a specialty all its own. I want learn more though, so this roundtable panel discussion was particularly interesting to me. This roundtable presentation, and insights from people like my new friend Doug Mellette from Vemark who came out to this conference, helped educate a “whole car” guy like me; that’s why I like the remarketing business so much, regardless of what you think you know, after two decades, there is still a whole lot more to learn.

The first day closed out with a reception officially opening the CAR Conference, and that’s always a good time to catch up with folks I hadn’t seen throughout the day. It was also the place, given the mix of attendees, that reinforced my idea garnered from a close inspection of the speakers list, that this CAR Conference, more than any of the others that preceded it, had a very strong mix of rental car operator attendees – from major rental car licensors, to licensees and independent car rental operators…more on this below.

CAR – Day 1

The core CAR Conference itself kicked off the first day with the usual welcome by Sherb Brown, Vice President and Group Publisher of Bobit Business Media, and, once again, everyone in this industry’s favorite emcee, Charlie Vogelheim, Vice President of Automotive Development, J.D. Power & Associates (Charlie is the premier car industry emcee at so many events, that indeed, I think that his name has to be the single most cited term in this blog, even over the word “car”).

The keynote address, presented by Jim Sanfilippo, Executive Vice President, AMCI Marketing, was entitled “Analyzing the Auto Industry’s Future and Effect on Used Car Values.” I have to admit, I came in a little late for Jim’s talk and I’m very sorry I did, as with what I did hear I could listened to him for half the day without a break. Next came a panel of factory consignors, that is, vehicle manufacturer remarketing folks, discussing the key issues they are facing in 2007. Then two short association presentation updates. The first, an update by IARA on its 2007 initiatives, which mostly centered on their creation of the industries first remarketing certification program, and its collaborative efforts with the NAAA. The second, an update by NAAA (National Auto Auction Association) initiatives.

Used vehicle grading standards (or maybe the lack of universal standards), have been a hot issue since I’ve been in the remarketing business, and is now even more important an issue with the increased percentage of online vehicle sales. The NAAA recently created a proposed set of standards, and made a presentation on this after updating the group on its 2007 initiatives. This was followed by the presentation of the results of a new study by IARA on establishing performance metrics for remarketing vehicles. Accurate universal grading standards and accurate remarketing performance benchmarks – two topics which, to be frank, seems to be kind of like the weather for vehicle remarketers, that is, everyone always talks about it but no one does anything…progress seems to be made now with these two leading industry trade association efforts, however.

The morning sessions ended with a panel presentation of upstream remarketers, one of the most interesting discussions for us, given what we do in this business. This area is constantly evolving, changing and consolidating. For instance, last year this time two of the largest wholesale upstream remarketers were ATC and Onlane, now merged into the same entity. Then, within 24 hours of this panel discussion, it was announced that one of the participants, Manheim’s OVE, bought another participant, Network Remarketing & Technologies, to consolidate a single unit. Fundamental structural changes I’m sure will continue to occur, as the “bricks and mortar” world merges with the online universe.

Along the same lines of the old world merging with the new, after lunch my old friend Raj Sundaram of ALG Guides now owned by DealerTrack, talked about dealer focused used vehicle inventory management, “Building Efficiencies Through Technology.” Then a panel discussion filled mostly with commercial lessors led a discussion entitled, “Remarketing Initiatives Among Institutional Portfolio Managers.” Now speaking of fleet industry evolution and consolidation and commercial lessors, as I put the finishing touches on this blog entry, it was just announced that GE Capital Solutions, which represents the largest commercial fleet lessor in the US, just bought PHH Corporation, the second largest vehicle lessor, which will form a commercial leasing giant that will have a combined portfolio of roughly one million vehicles. Change is constant, and it appears that industry consolidation in all ends of the fleet and remarketing business is as well…

The jam packed day concluded with a panel discussion on “Future Initiatives in Residual Values” with all of the major guide book editors represented – guidebooks, pricing, remarketing benchmarking, all major themes at any remarketing conference. And then things wrapped up with the annual CAR awards ceremony, recognizing the “Remarketer of the Year,” the “Consignor of the Year” and the individual “Best Auction” awards by factory and finance firms. Then it was time for the second evening networking reception.

CAR – Day 2

The second day of the CAR Conference kicked off with a presentation by Chip Perry, the CEO of AutoTrader, entitled, “Technology Matching of Vehicles and Buyers in 2010” – I can think of no one better to predict how the wholesale and retail used vehicle market will change over the coming years - as I’ve said before, for my money Chip is one of the brightest guys in the online car business today. Next the results of the latest Emercent study on remarketing and remarketing transport were presented (but unfortunately not by Julie Andersen, one of the founders of Emercent, as she had “transport” difficulties of her own…weather grounded her in cold Chicago so she couldn’t make the presentation herself). This was followed by a report by Steven Greenfield of Manheim on the globalization of the Auction Industry – with Manheim auctions now running in China, there is no better US based firm to present this macro global viewpoint.

Next came an educational presentation on “Maximizing Resale Using Data Mining” from Tom Libby, Senior Director, Industry Analysis of JD Power’s Power Information Network. I honestly think that used vehicle retail and wholesale sales data mining, in general, is not utilized anywhere near as well as it could be in this industry as compared to others, and the gap between what is available and what is used by most companies in the efficient remarketing of vehicles, is vast - with the exception of the manufacturer segment, who are very sophisticated using this type of data. Specifically, with both its retail and wholesale actual transaction and demographic data, PIN is for the most part an undiscovered resource for vehicle remarketers, and I predict that using this data, which is unbiased by any auction chain source or book reporting agency as its taken right from automotive retailers internal data management computer system (and, indeed, one of, if not the only source for actual retail transaction data – and retail transaction data always precedes wholesale trends), will be the next big thing in the evolution of remarketing methods.

After lunch, there was a presentation on one of the hot national consumer topics right now, entitled, “Latest Title Washing and Odometer Fraud Schemes,’ by David Sparks from the National Highway Traffic Safety Administration. While less prevalent than the “bad old days of 20 or so years ago (an old time use car dealer friend of mine has told me that back in the late seventies, some days it was rare to ever see a car that ran through the auction lanes with more than 45,000 miles – everyone knew what was going on, in volume, but no one did anything about it, back then), “clocked” cars with “washed” titles still trade in the market today. I never understood, in this age of digital data and imaging, why there is not one coordinated national title policy/service, and/or why each State’s DMV titling database can’t be hooked in with every other state’s database – I may be naive but that would eliminate the state by state DMV policies that create the ability for unscrupulous folks to “wash” titles right? Yet it each time a national policy bill appears before congress, it never seems to pass…that, even after the national focus on the volume of Katrina flood cars that are entering the marketplace right now. Hate to say it, but it seems that some lobbyist group or political action committee somewhere must be pushing hard against a national policy that would close this loophole…otherwise why the inactivity on what would seem to be such an innocuous piece of legislation? At any rate, on the same point, the day closed out with panel presentation entitled, “Impact of Electronic Titles on Remarketing,” the group discussed how the growing use of electronic titles by state DMV’s will effect remarketers.

After the learning the latest in odometer fraud schemes, appropriately enough, came a panel presentation on inspection processes (maybe a good inspection process reveals “clocking”?), moderated by my old friend Scott Kolb. As more and more remarketing sales are done online, to both wholesale and retail buyers, accurate vehicle inspections, with well taken pictures, has become a much more important part of the remarketing process. As such, an efficient, low cost, accurate and timely vehicle inspection is vital to attaining higher resale dollars, and, indeed, the Web is stimulating evolutionary changes in this formerly staid area of the business as well.

Finally, there was a very interesting panel discussion, entitled, “How Can Remarketing Channel Vendors Attract More Consignor Business?” A multifaceted topic, the panel could not have better chosen to represent many different sectors in the business, with representation from a large daily rental licensor, a large commercial lessor, a manufacturer captive finance company, and an large automotive independent credit company. This presentation, in particular, provided very informative input for what we do here at Driveitaway in our day jobs…

In summary, the CAR Convention this year was great success and had over 500 people and over 18 presentations and panel discussions. What was striking and different about this one though (and makes me think maybe I’ve chosen the right line of work these days), was the composition of both the attendees and some of panelists. In particular, for the first time that I can remember all of the major daily rental licensor remarketers where in attendance and two were eloquently represented on panel presentations at CAR this year. As the cover story for the Jan/Feb issue of Auto Rental News highlights, for the first time, major daily rental companies face a rapidly growing quantity of vehicles they own and need to remarket in their fleet, as opposed to short term leased “program” cars bought back and disposed of by the manufacturers. What was a trickle of “risk” cars the beginning of 2006, has turned into trend this year, and as Sherb Brown’s editorial suggests in that same issue of Auto Remarketing, new focus and methods in remarketing for this sector of the industry will surely follow. The 2007 Manheim Market Report that was released at the NADA conference in February predicts that over half of the rental industry fleet this year will be “risk” vehicles (units that the rental companies own and have to remarket themselves, with no buy back guarantees), which represents a basic fundamental paradigm shift in the way rental cars will be remarketed in the near future (except for Enterprise, which always retaiend a large dedicated staff devoted to both wholesale and ‘direct to consumer’ retail vehicle remarketing). Paradigm shifts and educational market conferences go together well, I think, and, that made me particularly glad I attended this CAR conference, and, particularly glad I’m in this business today…

2007-03-23T00:56:00.000-05:00

Vol. 3 No. 5

Special Guest Writer

Demetra Markopoulos

Chicago Auto Show & National Association of Fleet Administrators Chicago Chapter Meeting, February 9, 2007

As the snow continues to fall, thousands of Chicagoans bear the cold to make their annual trek to the 99th edition of the Chicago Auto Show, held February 9-18, at the McCormick Center. Over 1,000 vehicles are exhibited, surrounded by specialty displays and experts, exceeding 1,200,000 square feet of space. I spent practically all day at the show on Friday, February 9th, but I’ll do my best to give only the highlights.

The morning began bright and early with a breakfast meeting for the Chicago Chapter of NAFA. Kudos to holding their meeting in conjunction with the Auto Show- I couldn’t think of a better way to spend my Friday morning and afternoon. The meeting was chaired by Julie Bromley, Fleet Director, Reedy Industries, who gave the projected 2007 agenda for the Chicago Chapter. Following was Nominating Co-Chair, Mel Pawlisz, Manager of Transportation and Fleet Services, La Petite Academy, who proceeded with the nominations, and then elections, of the Chapter officers and co-chairs. The results were as follows: Chair- Julie Bromley, Vice Chair- Diane Lopez, Manager, Corporate Fleet Domestic, Abbott Laboratories, Treasurer- Betsy N. Kupkowski, CAFM, Buyer, Fleet Senior Square D, and Secretary- Julie McDowell, Fleet Manager, Hospira. The 2007 Co-Chairs are: Joe McDonald, Director, Account Management, Wheels, (Affiliate); Larry Janus, of Fleet Lease Disposal, (Program); Lori Miller, Area Manager/Fleet Consultant, Mike Albert Leasing, (Reception); and Mark Legrand, Regional Manager, ARI and Mark Kurth, Regional Vice President, LeasePlan, (Golf).

Now off to the show! I didn’t know where to begin, but that quickly changed when a representative from Toyota approached me to be on camera. Toyota had a stellar idea in shooting mock commercials at their display, attracting a huge crowd. I’ll have to admit, always being one to crave the spotlight (anywhere, anytime, Hollywood are you listening?), it didn’t take much convincing to get me to follow. Heck, maybe if I’m lucky enough, they’ll use it one day. If you see me on television, talking about the new Toyota Tundra, you’ll know where I made my filming debut – in the meantime, take a look at http://www.youtube.com/watch?v=KVOVu9e2iTI (and send in your fan e-mail). In addition to the Tundra, they really placed a focus on their hybrid vehicles. For the first time ever, the entire Toyota Motor Corporation was awarded with the Best Eco-Friendly vehicles, by MotorWeek Drivers’ Choice awards.

Off to the next manufacturer. Ford Motor Company Executive Vice President, Mark Fields, journeyed to the Midwest to announce the return of the Ford Taurus during the Ford Press Conference. I took a look at the vehicle myself, and noticed a new design, giving it a look of refined style and luxury. The word “Taurus” had become synonymous with fleet, but the reintroduction should bring a sense of tradition to the Ford lineup, coupled with a new attitude. It takes more than a simple name change though to realign public perception, and Ford will have to give a lot more “care and feeding” than they have in the recent past to this brand icon back where it once stood.

Having recently met automotive legend, Carroll Shelby, at the J.D. Power International Automotive Roundtable, I had a whole new appreciation for the Mustang Shelby GT. But what can I say? It’s a classic and I like fast cars…and I do my best to avoid the speeding tickets that are almost guaranteed to follow.

Probably the most eccentric car I saw was the Mazda concept car- the Ryuga, (and no, I’m not biased because I drive an RX-8 – are you listening Mazda, I’m up for a television broadcast for you as well). The only thing I can say is that it was sleek, sharp, and it reminded me of a shark; but see for yourself in the picture and you can make your own conclusions. Now that’s a car I’d like to take for a spin!

As always, Cadillac had their array of classic, luxury cars, with the CTS as their debut for 2007, and the Escalade still stirring up buzz. Chevrolet’s futuristic, concept car, the Volt, was a sight to see, and naturally the Corvettes were just as popular. I took a waltz through Dodge’s enormous exhibit, filled with trucks like the 2008 Ram, introduced to the world at the Chicago show. Although I always viewed Dodge as producing a “man’s” car, I have to say, the Viper is definitely my style. Next I moved on to one of my favorite manufacturers, Mercedes-Benz, who boasted their collection of beautiful, upscale cars. I stopped at my favorite of the group, and of course it was the SLR McLaren 722 Edition, starting at “only” $450,000.

Lamborghini, one of the world's top exotic car manufacturers, made their debut with the Murciélago LP640 Roadster, the only one currently in the U.S. I would say from the crowd, it was a favorite at the Chicago Auto Show. With a V-12 engine, 640 horsepower rating, blowing by at 0-60mph in 3.4 seconds, and maximizing at 211mph, it will leave you blowing in the wind. Although the Lamborghinis were roped off, I was lucky enough to be able to talk and “smile” my way in for a close up (bet the regular “car guy” author of this blog never could have pulled that off). I wonder if my smile will work as good for a test drive?

On to the Maserati GranSport MC Victory-- a six-speed Cambiocorsa transmission, 400 horsepower, 0-60mph in 4.85 seconds, 19 inch rims, now that’s a hot car. It’s a limited edition model, and with only 50 being produced for the American market, and 180 total worldwide. The salesman told me that the car was available after the show was over, and if I so desired, I could drive it off the premises on the 18th. So…I took his business card and told him I’d be in touch.

Can you tell I like sports’ cars?

My only negative critique, and much to my dismay, is that I didn’t see my favorite car this year- the Ferrari. But all in all, what I did see I liked, and the show was fantastic, evident from my aching feet as I hobbled back home. I’m already looking forward to next year’s 100th Anniversary of the Chicago Auto Show!

2007-02-19T07:37:00.000-05:00

Vol. 3 No. 4

NADA 90th Annual Convention, Part II – Great Cars, A Great Floor Show, Great Parties, and Lots of Old Friends…

As expected, the greatest annual convocation of “car guys,” didn’t disappoint and kept me moving 20 hours a day for about five days. As I said last year, one of things I like best is that this convention is big and bad enough to unite all “car guys,” even if they don’t work directly in the car business. It also is the once a year event that gets “car guys” from all corners of the world, from every continent, for those few days united, focused on all things related to, well, cars....

Once again, the shear square footage of exhibitors on the exhibition floor is amazing. You really can not cover it all well in even two days worth of time. Over six hundred vendors, many with two story booths, working kitchens and bars, overstocked with food and candy – let’s just say walking the place for the better part of two days wasn’t a chore and you would never go hungry. Interestingly, two of the most popular booths were from two distributors of China-made cars looking for US Dealers. While neither China American Cooperative Automotive, Inc., of Parippany, NJ nor Miles Automotive Group, of Los Angeles represent major vehicle suppliers in China, that didn’t seem to dampen the enthusiasm of dealers looking for distribution rights.

Demetra Markopoulos from Driveitaway meets various "characters" on the NADA Convention Floor - (from left to right) "The Car-Diologist," "The OVE Ferret," and "George W. Bush" (about as genuine as the Dr. or the Ferret)

Also once again, just walking the massive exposition floor I ran into many old friends and acquaintances that I haven’t seen in months or in some cases years. I’m especially glad I got to spend some time with Warren Brown from the Washington Post. Warren is one of those industry veteran auto journalists who I never fail to learn many new things about the business every time we have a conversation. I’m also glad I got to meet, for the first time, Chris Woodyard, the automotive writer for USAToday. As one can probably tell from these blog entries, I’m kind fancy myself as a (very) amateur (very, very) frustrated automotive journalist myself, of sorts, so it’s really a fun for me to converse a bit with the professionals.

I’m proud to say that this year’s Convention Chairman was none other than David Penske, from David Penske Chevrolet, in King of Prussia, right outside of my hometown of Philadelphia, and he put on quite a show. With keynote speakers Richard Colliver, EVP of Sales, Honda of American, and Jack Welch, former Chairman and CEO of GE, motivational speaker, Sugar Ray Leonard, and Fox News Anchor Stuart Varney as a moderator, there were enough celebrities on the podium to usher in Dale Willey, the new NADA Chairman, taking over the top roll from outgoing Chairman William Bradshaw.

During the convention exposition, there were, of course, dozens of simultaneous workshops going on, grouped this year into six different topic tracks – “Strategic Business Management and Succession Planning,” “Business Development,” “Vehicle Sales,” “Fixed Operations,” “Human Resource Management,” and “Technology.” Topics titles ranged from, “Anatomy of a Construction Budget” to “How to Sell an Extra 100 Cars a Month;” from, “The Psychology of Service Selling” to “Dysfunctional Family – Functional Business: Navigating the Landmines of a Family Business.”

In addition, it was a year of fairly challenging manufacturer “make” meetings, that is, the organized meetings where the manufacturers address only their dealer body in a closed door sessions, where even the press is not allowed to attend. And speaking of the press, this year there were no fewer than 17 press conference scheduled over a three day period (that’s about five more than last year, as a I recall): from Manheim Auctions, who once again introduced this year’s annual Manheim Market Report (glad to say it forecast that, as expected, less than half of the vehicles supplied to rental car companies this year will be program “buy back” units – it may not mean much to most, but this prognostication means a lot to me), to F & I Magazine’s annual “F & I Dealer of the Year” presentation, to a brand new woman focused Web based offering with the name of “AskPatty.com, Inc.”

Give Me the Night (or, Why I lost my Voice by Monday Morning)

The View of Las Vegas from Jaguar Landrover Party at Mix at THEHotel

I guess it may be typical for most large conventions to host a reception or two after the days work activities, but what is normal for most conventions goes to the “extreme” for NADA – that by the way, is what I like most about the car business, its filled with “extremes”…conventions, personalities, etc. (that’s the why it’s the only place I feel I fit in).

Of course I could only go to a small handful of the dozens of receptions and parties going on each night. However, once again, to give a sense of scale here, I’ll list the receptions and parties I knew about (and again, there were probably double this number, as most go unpublished and/or I don’t get invited to them), not counting the 23 different State Automotive Dealer Association functions:

Friday, Feb 2nd
Automotive Youth Educational Systems, Inc.
Autoteam America
General Motors & GMAC Financial Services
NADA/Dealer Academy
Incisent Technologies/First Look
Credit Union Direct Lending
ATAE
DaimlerChrysler Minority Dealers Association
General Motors Minority Dealers Association
The Wall Street Journal

Saturday, Feb 3rd
ADP Dealer Services
Audi, Bentley Volkswagen
Cobalt Group and Dealix Corp
Bank of America
Stone Eagle Group
General Motors Vehicle Divisions and GMAC Financial Services
Mitsubishi Motors North America
Northwood University
O’Connor & Drew PC and Massachusetts State Automobile Dealers Association
Jaguar Land Rover
Resource Automotive Group
American Suzuki Motor Corp.
RouteOne LLC
Isuzu Motors America
United Car Care Inc.
Zurich
Kia

Sunday, Feb 4th
North American Dealer Co-Op
Ford Motor Company
Mazda North American Operations
Subaru of America
Hyundai Motor America
Toyota
DealerTrack
Universal Warranty
[And the Super Bowl afternoon bash that I attended, hosted by CNA Insurance]

So who threw the best party this year? If I have to narrow it down to one single event, I have to say that, for venue alone, the Incisent Technologies/First Look reception, at the Wynn-Penske Ferrari Maserati store in the lobby of Wynn’s Hotel Casino, was my favorite – lets face it, lots of the events had top shelf drinks and outstanding food, but eating, drinking and mingling around those $300k + cars did it for me this year…

Close runners up included the Resource Automotive reception in the main ball room of Caesar’s Palace, replete again with working bars carved entirely out of ice (and a few standard ones as well), at least a dozen or so food kiosks, and great band; and the Jaguar Land Rover party always takes top honors for cool sophistication, this year held at Mix at the top of THEhotel at Mandalay Bay.

Finally, honorable should probably go to the DealerTrack party at Studio 54 at MGM. While it lost a few points for having pre-defined bottled drinks served in plastic cups (I think this may have been the only NADA party I have ever been to where I had to pay for my scotch), the venue, music, and crowd pleasing dancers where lively and provoked quite a reaction from the guests towards the end of the night.

So that’s it, the start of another year, and the end of this year’s NADA – this is such a good show, it’s a shame we have to wait another whole year for the next one

Next Year, San Francisco

I’m looking forward to next year’s NADA event (I may have my voice back by then), February 9-12, in San Francisco.

2007-02-13T08:36:00.000-05:00

Vol. 3 No. 3

The JD Power Roundtable & the 90th Annual NADA Convention, “The Main Event” Part I
or
You Can’t Really Start the Year without the Granddaddy of all Car Conventions…

NADA 2007 Chairman Dale Willey addressed the NADA's convention

Once again, it was time for the largest industry event of its kind, the National Automobile Dealers Association (NADA) Annual Convention and Exposition 2007, February 3-6th. Over 26,000 registered attendees, this annual event is so large there are only a few convention venues in the entire country that are large enough to host this event – so every year it goes through a rotation, San Francisco/New Orleans/Orlando, and this year, my favorite venue, Las Vegas, Nevada – on Superbowl weekend, no less (which added another 150,000+ people to the town, if I read the statistics correctly).

This is (no kidding) my 21st year attending NADA (I must have started going before I could legally drive), and schedules and planning notwithstanding, once again, I came no where close to catching up with everyone I intended meet up with there, and went to only about half the events I was invited to attend. The exposition floor seemed bigger and better than ever, with over 600 exhibitors, exposition, presentations and workshops during the day and the receptions at night, 20-hours days are the norm at this event. On Saturday night, February 3rd, I counted no less than four simultaneous receptions going on, just at Caesars Palace alone (and this, as far as I could tell, was duplicated at the same time in every major hotel on the strip).

But You Can’t Go to the NADA Convention, without Starting Out a Couple of Days Before with JD Power…

It has become an annual tradition for many industry folks “in the know” to come a couple of days before NADA officially starts and attend the JD Power Roundtable meeting, this year held at Green Valley Ranch February 1st & 2nd. Manufacturers, OEM’s, and retailers alike see this meeting of great value, and every year it kicks off with their annual Franchise Assessment, which reviews the strengths and weakness of automotive franchises and their products. Now, for the last six years, I’ve attended the JD Power Roundtable meeting that precedes the annual NADA Conference and never been disappointed. I think I’d probably attend anything Charlie Vogelheim hosts (really if I had even one instructor like him in law school I’m sure I would have attended class a lot more often), but he is certainly at the top of his game putting together and engineering the best out of all of VIP’s and intelligencia that make up this Roundtable.

Industry Legends Dave Power and Carroll Shelby share the podium

The kick-off dinner Thursday night, Febuary 1st, for me at least, was a very special event, as the key note speaker was non-other than automotive legend Carroll Shelby himself, Chairman and CEO of Shelby International, Inc. and Shelby Automobiles, Inc. Shelby is one of those rare personalities that virtually everyone in the car business looks up to and respects as an industry hero, as he personifies the “guts & brains” of the quintessential car entrepreneur. He is also a very nice and charitable man, giving back to his community at every turn (see his Carroll Shelby’s Children’s Foundation™). You know, from a personal perspective, not to take away from any younger folks, but when you see industry legends like David Power and Carroll Shelby up on stage together, guys that truly did, almost as a force of nature, trail blaze innovation and reshape the car industry, you kind of wonder where there counterparts are now a generation or two behind them – I’m afraid maybe they don’t make “car guys” like them any more, and that’s too bad.

Carroll Shelby with Driveitaway's Demetra Markopoulos

Preceding Carroll Shelby on stage was the new President of Shelby Automobiles, Amy Boylan, who has the interesting history of running the Hot Wheels division for Mattel before coming into the “big toy” car business. From what I read, and from hearing her on stage, she seems to have melded into the automotive industry as if she had been there her whole career, and is having amazing success at Shelby Automotive. Which proves, I think, talent is transferable between industries (like Alan Mulally at Ford, for instance), and, just perhaps, the there is a common thread between people who like “big” cars and “little” cars (see blog entry Vol. 2 No. 36).

The Next Day, Down to Business…

The next day started off with a comprehensive industry analysis by Stephen Girsky, now President of Centerbridge Industrial Partners, an industry hedge fund, but most recently a Special Advisor to GM Chairman & CEO Rick Wagoner, and, before that of course, the Managing Director/Senior Global Automotive Analyst at Morgan Stanley. Girsky has always been one of the foremost authorities on the industry (which I guess is why they put him in charge of a $3B hedge fun). My conclusion from his presentation: there still is too much capacity in the OEM’s and its going to be more challenging before it gets better…but eventually things will settle down a bit…and there are always opportunities.

This particular Roundtable always seems to get its share of top politicos, and this year was no exception with two presidential candidates: former Governor of Iowa, Tom Vilsack, and former Governor of Wisconsin, Tommy Thompson. While I’m not a big fan of political rhetoric at car events, it really wasn’t too tough to take these two Midwestern neighbors, with excellent moderation by Susan Page, the Washington Bureau Chief of USA Today.

This was followed by a presentation by Gary Dilts, now Senior Vice President of JD Power, but formerly Senior Vice President Sales of Chrysler. Dilts was a 30 year veteran of Chrysler before he left this year (which means, by the way, he was there way before and way after I was Chrysler dealer), and his presentation, entitled “More Equals Less” sort of echoed on the retail end what the essence of whatt Girsky’s talk conveyed from the supplier side, mainly too many brands, too much capacity and more carnage before things get better.

Next came a fun presentation about a fun new car to hit the market soon, the Smart car, from Daimler Chrysler. Dave Schembri, President of Smart USA and Tony Pordon, Senior Vice President, UnitedAuto Group and Smart USA, detailed the well conceived product and sales strategy behind the new Smart car product. You know a few years ago I would have said that they would have an up hill battle selling a tiny little two door, kind of “cutesy” car, but how can anyone argue with the success of the Mini by BMW or Toyota’s Scion product. Still, it will be a long while before I look for a car that allows me to change my door panels to suit my mood.

This was followed by a presentation by Troy Clarke, President of General Motors North America, which had enough impact to be quoted in the Wall Street Journal the following week. Among other things Clarke announced a 10 year/100k mile power train warranty on all GM Certified used units – another strong message that the strength of used car values directly affects the state of new vehicle sales. Prior to this talk, at the Detroit auto show the week before, GM announced, and Clarke confirmed, the cut back of another 100k units from daily rental service this year (which followed a 100k prior year cut) - no more greatly subsidized GM rental car fleet offerings – again demonstrating now a firm commitment to strengthening residuals. That’s good for the industry and good for the domestic manufacturer’s “P & L” (and not bad for our business either…).

In the afternoon Steve Wilhite, Chief Operating Officer of Hyundai gave a well done presentation that focused on the importance of the retail dealer in vehicle brand sales and customer satisfaction, and indeed, established that dealer profitability is a baseline enabler for the practice of sales satisfaction. This was followed by my favorite session of the day, the Retailer Feedback panel. Moderated by Ed Lapham, Executive Editor of Automotive News, the panel included John Bergstrom, Chairman and CEO, The Bergstrom Automotive Group, Earl Hesterberg, President and CEO, Group 1 Automotive, Susan Scarola, CEO, DCH Auto Group, and Tony Schurr, COO, The Larry Miller Group. Training and development of employees for attracting and retaining good people, which, in turn, ensures good performance and customer satisfaction seemed to be the underlying theme of this panel. I counted it up and between the panel, in total, they represented over 200 retail stores, indicating the tremendous expertise the collectively had on the topic.

Ed Lapham moderates the dealer panel, with John Bergstrom, Earl Hesterberg, Susan Scarola and Tony Schnurr

Finally, this roundtable wrapped up with a special presentation on the area that seems to be creating the biggest “buzz” right now, that is, the consumer growth and impact of China. John Humphrey, Vice President, Asia Pacific Region, JD Power, and Michael Dunne, Vice President, China, JD Power explored both the “sell” (Chinese imports to the US) side and the “buy” (opportunities for investing in China) side on the topic. It’s all a little beyond me, but interesting from a global perspective.

It’s Night Time in Vegas, Time to Look Around at a Whole Lot of Nice Models…

After the JD Power Roundtable, I wrapped up the very first full day in Vegas at a fantastic reception hosted by Pat Ryan’s Incisent Technologies First Look dealer inventory management system. The First Look folks always do it up right, this reception was hosted at the Wynn-Penske Ferrari Maserati store in the lobby of the Wynn Casino, and I was very grateful for receiving an invitation. High end drinks, food and Ferraris all seem to go together somehow, for a perfect end of the day. My thanks to the Ryan folks and Tony French, Vice President of Sales, for inviting us - although this reception was to be followed by many others throughout the course of NADA, it gets my vote as the best one of the convention this year. Now if I could just get my hands one of those nice looking cars and take it for a spin around Vegas…

To be continued…

2007-01-30T13:10:00.000-05:00

Vol. 3 No. 2

Time for the Annual 2006 in Review (or how I put all on all those air miles…): Part II

Okay, so continuing from where we left off…

July – July topped off my all time favorite manufacturer fleet show, the annual Ford Fleet Preview in Las Vegas, NV, July 23-25th. While Ford, consistently produces the best of the manufacturer fleet shows every year this one, in particular, seemed the best I’ve attended so far, with the keynote of Mark Fields, Executive Vice President and President of the Americas, laying out Ford’s fleet strategy, not to mention Jay Leno as the private entertainment for the fleet folks. If the quality of the fleet offering is any indication, Ford’s rebound is well charted and underway.

This year the Ford Fleet show was followed immediately by the International Automotive Remarketers Alliance (IARA) mid-year roundtable July 26th -28th, in San Diego, CA. My old friend Layne Weber, Vice President of Remarketing for Donlen Corporation, being given the IARA Remarketing Industry Recognition Award was the high point for me, and something not to be missed.

August – This month brought something brand new to my car conference agenda, although it was the European Networking Group’s 3rd Annual Executive Summit, it’s the first one I ever attended. Entitled “Next Generation Automotive CRM,” it was August 15th -16th in Manhattan Beach, CA, and well worth attending again – watching Ralph Paglia,CRM/eBusiness Director, Courtesy Chevrolet, outline his Internet retail sales strategy alone was worth the price of admission.

September – Of course, September always is the month my favorite (and longest consecutive attendance, this conference marks my 20th year) trade association, the Automotive Fleet & Leasing Association (AFLA), holds their annual conference, this year September 12-15, in Rancho Mirage, CA. Although this conference, in 20 years has never disappointed me, this year seemed extra special, headlined by John Davis, the host and creator of Motor Week on PBS, and crammed full of great presentations. Of course, on top of all of the scheduled events, we continued our tradition of throwing a little party of our own for a few hundred of our closest friends…The AFLA conference always turns out to be my favorite convention of the year, not only for the program schedule but because I get to catch up with all of the good friends that have been involved in the organization for many, many years.

October – Not sure what happened to October this year, I’m sure I traveled somewhere, but not to any conferences…

November – Okay, so I think we made up for the lack of conferences in October with the first week or two in November. The month started off, with the JD Power International Internet Roundtable 2.0, November 1st – 3rd, that happens simultaneously with the SEMA show, in Las Vegas, NV. Charlie Vogelheim successfully focused this Roundtable on Internet developments for the first time last year, and this year’s conference was even better that last year’s amazing event. Then, a few days later, still in Las Vegas, the DealerTrack organization did their first ever “Innovation Conference” for automotive retailers on November. 6th – 8th, and right after, and in conjunction with, DealerTrack’s function, the annual grand daddy of “F & I” events, Bobit Business Media’s F & I Management and Technology Conference and Expo began and concluded November 10th.

December – Not too much going on as far as conferences or seminars, and I think, for as many days of functions in Las Vegas last month, it was good to sit this holiday month out a bit…

Once again, to be in this line of work you have to like cars and car people, and, of course, love Las Vegas….