F&I and Showroom, October 2016

www fi magazine com 34 F I and Showroom October 2016 ON THE POINT Im sure youre all familiar with the story of the Pied Piper of Hamelin Although more legend than truth its based on events dating back to the Middle Ages around 1284 As the story goes the German town of Hamelin hired a piper who promised to solve its rat infestation by luring them into the Weser River with his magical pipe As the story goes the dastardly Mayor of Hamelin refused to pay the piper the gold he had promised In retaliation the piper used his pipe to enchant the children of the town They followed him to Keppenberg Mountain where they were magically swallowed up One theory is that the piper was a professional rat catcher and the children who disappeared were actually victims of the plague the rats carried The earliest known record of this story is from Hamelin where the pipers image was set in stained glass in the towns now destroyed church So yeah the pied piper was a real person No Im not using this months column to analyze this Brothers Grimm fairytale I just see some parallels between the Mayor of Hamelin and the modern car dealer with the piper being that salesperson or manager who was run out of the business because of an increasingly reduced pay plan There is an accelerating trend in the car business Manufacturers and vendors are telling dealers they can make less gross per unit and sell more cars if they pay their people less the reduced pay plans justifying the reduced profit per unit One of the pitches is that dealers can dismantle the F I office and eliminate this highly paid position by having salespeople handle the finance transaction and the sale of F I products Their claim is that technology can replace these highly paid F I pros by helping these lower paid employees deliver a higher net profit Sounds ridiculous right Well dealers are biting Ive written about it talked about it in every speech and seminar and predicted it exactly as it is playing out today The damage is done and its reaching critical mass and many dealers are about to discover that they wont be able to unwind this mess When I wrote The Prosperity Equation nearly 20 years ago I noted that my philosophy has always been to hire the best people and pay them too much There simply is no substitute for highly trained people But now were seeing those high quality people retiring or leaving the business for another industry In fact Ive written about the talent drain the car business is now experiencing The problem is theres no serious money to be made in many dealerships today and the industry has not developed qualified replacements for the skilled people who are leaving The other problem is there are no competent schools teaching real world dealer management skills Instead theories are being taught by instructors who couldnt sell rifles during a prison break Its probably why my sales manager seminars are always sold out So dealers are now paying the piper and its going to get a lot more expensive to right the treachery that got us into this mess Why is that Well because talented managers are going for a premium I am seeing dealers attempting to get managers from their crosstown rivals to jump ship by offering stupid money Yup the piper is getting paid As for the big publics they cant buy more stores because they dont have anybody qualified enough to run them The general managers who are qualified are now demanding and getting upward of 1 million a year And you can forget about landing one of these high qualified GMs without offering a partnership or an equity stake in your operation Nothing symbolizes this trend more than one of the big public groups which continues to fall deeper into the toilet the more it adopts these wage cutting technology solutions and new age theories Heck your kids could buy this groups stock with their lunch money My prediction is well see this trend reversing in the near future Im already seeing the topic addressed by this magazines competitors as well as at a number of conference and dealer 20 Groups Until that happens dealers will have to pay the piper Keep those emails and Facebook messages coming ABOUT THE AUTHOR Jim Ziegler is the president of Ziegler SuperSystems Inc Contact him at jim ziegler@ bobit com Time to Pay the Piper Da Man has a message for dealers enchanted by the promises of these new age tech solutions and theories Get ready to pay the piper BY JIM ZIEGLER I WHEN I WROTE THE PROSPERITY EQUATION NEARLY 20 YEARS AGO I NOTED THAT MY PHILOSOPHY HAS ALWAYS BEEN TO HIRE THE BEST PEOPLE AND PAY THEM TOO MUCH THERE SIMPLY IS NO SUBSTITUTE FOR HIGHLY TRAINED PEOPLE BUT NOW WERE SEEING THOSE HIGH QUALITY PEOPLE RETIRING OR LEAVING THE BUSINESS FOR ANOTHER INDUSTRY