F&I and Showroom, August 2013

On the Point from the old guard Bear in mind Volkswagen set lofty goals with Toyota fi rmly in its crosshairs And until it realizes the value of its dealers and gets more realistic with its marketing expect the company to continue reorganizing until it fi nds the right formula An interesting footnote to this story is Volkswagen plans to bring the Phaeton back to the U S market The ultra luxury model was pulled out of the market seven years ago after a dismal sales Once again it was totally their fault misreading the market and failing to be competitive in establishing a new brand Yes I said a new brand As Ive said about Hyundai with its Genesis and Equus models I think VW is biding time before it rolls out an upscale luxury brand like Toyota did with Lexus and Honda did with Acura The question they have to answer before they make that move is Can the U S market absorb 90000 Volkswagens and Hyundais The highline segment is already crowded and competitive enough So do these two OEMs really want to jump in the ring with the big dogs More on Tesla Everybody is nervous about Tesla including investors In fact after analysts re assessed risk and Goldman 20 F I and Showroom August 2013 Sachs questioned the sustainability of demand Tesla stock suffered the biggest one day drop since January 2012 in mid July plunging 14 percent Uh oh is the bloom off of the rose Lets watch this one as Tesla continues to campaign against state franchise laws Flats vs Markups Brace yourself its going to happen In recent weeks its become evident at least to me that the Consumer Financial Protection Bureau CFPB is going to regulate and ultimately eliminate dealer fi nance reserve Rate profi t on fi nance contracts will become a thing of the past From everything Im seeing and hearing in the industry a lot of people are running around like Chicken Little screaming that its the end of the world as we know it Is it really all that bad I dont think so as Ill be embracing the loss of dealer reserve as a good thing thats been long overdue Think about it When you average in the homerun deals with ones that are already at buy rate or zero percent what is the actual average rate profi t per fi nanced contract Now how much of that is charged back or refi nanced by the consumer And what is the one area of F I that leads to consumer confl ict in the box If you were paid a fl at fee per contract in the amount of say 500 wouldnt F I move quicker and with less stress and confl ict Imagine being able to tell a customer Heres the lowest rate you qualify for take it or leave it And if we were to transition to fl at fees I know lenders will be jockeying for position to get your business Take Ally Financial and its Champions Club That program allows dealers to hit a homerun if they hit several guidelines that have nothing to do with holding rate profi t Trust me on this one all of the lenders will start bidding for your business and will be throwing in fi nance incentives and raising the fl ats higher than the other guy Its going to be OK Stop worrying and go with it I Hurt Myself Today I just watched Johnny Cashs Hurt video on YouTube again and I have to admit it hits those emotional buttons The message is so deep in so many ways especially knowing where Johnny Cash and June were coming from at that point in their lives Its 2 a m in Atlanta and Im wrapping up another column Truth is Ive been at the desk since 6 a m Im not really tired but the pain is still there when I pay attention to it Ive said it a million times I am where I am in my life wherever that is because I am willing to do things others are not willing to do to get what they want No Remy Martin Louis XIII Cognac this time Somehow it just doesnt mix well with Percocet Please keep those e mails texts and phone calls coming I love hearing from you Jim Ziegler is the president of Ziegler SuperSystems Inc and the creator of the Internet Battle Plan series To contact Ziegler e mail him at jim ziegler@ bobit com Tesla stock plunged 14 percent in mid July after analysts re assessed risk and Goldman Sachs questioned sustainability of demand