Ziegler believes simple math is the solution to most manufacturers’ self-imposed problems. 
 - Photo by skynesher via Getty Images

Ziegler believes simple math is the solution to most manufacturers’ self-imposed problems.

Photo by skynesher via Getty Images

Those of you who have followed my speeches, blogs, social media posts, and articles over the last 25 years know there are two things I really enjoy: The first is crowing about predictions I’ve made when the rest of the industry was going the other way. The second is calling out manufacturers and vendors for making stupid decisions.

In this issue, I get to do both.

Told You So

Last year, I wrote an article called “Bound to Fail” for the May 2018 issue of F&I and Showroom. To summarize, I said subscription car programs were going to die a miserable death. The main reason? Math.

The manufacturers have all made the same moronic miscalculation to chase those mythological millennials. They even convinced numerous dealerships to push their chips in. Jeff Wyler Dealerships in Cincinnati made a major commitment to make subscriptions work, as did the multistate Germain Automotive Group.

Well, in November, Wyler closed down “Wyler Fastlane”; their website is presently blank. And it’s far from official, but insiders tell me Germain’s program is on life support. Wyler and Germain are two of the best-oiled machines in the business. If they can’t make it work, what makes us think a bunch of inbred factory yahoos can pull it off?

Cadillac suspended “The Book” after their goofy tenure with Johan de Nysschen at the helm mercifully ended. De Nysschen totally scuttled Cadillac with the blessing of top GM executives looking on as he oversaw the (recently reversed) move of the brand’s headquarters from Detroit to New York and rebadged models with ridiculously forgettable alphanumeric names.

If I were a member of GM’s board, heads would roll. Instead, they’re getting Cadillac ready for another crushing embarrassment. They’re calling it Book 2.0. This time, they’ve promised to work more closely with dealers.

These people really don’t get it, do they? Dealers don’t want more help from factory executives. They always screw it up. They should get out of the dealers’ business. They’re bad at it. That’s why I predict Book 2.0 will be more screwed up than a pile of coat hangers. It’s just common sense.

Ghosn … Ghosn … Gone!

Who would have thought? Former Renault-Nissan-Mitsubishi chief Carlos Ghosn is in jail and his family is under investigation. José Muñoz has “resigned” as Nissan North America’s CPO following a forced leave of absence and scattered reports indicating he was refusing to cooperate with Nissan’s internal investigation of Ghosn. Will he be indicted? Who knows? But Nissan executives the world over are trembling in fear every time a phone rings or there’s a knock at their door. Who would’ve thought this could possibly happen?

Me, that’s who! I have written about suspected corruption at the top levels of Nissan management for years now. Nobody paid attention.

Do they deserve what they’re getting? In my opinion, what goes around comes around. Nissan has long had the reputation being the most heavyhanded manufacturer, threatening and beating some dealers into submission while rewarding others with preferred points and free cash unavailable to others.

As far back as 2015, I was raving in articles about executive decisions and actions that appeared to be blatantly corrupt. At the time, I came under heavy attack for suggesting that. Today, I feel I am vindicated — as I have been many times in the past.

Nissan’s investigation into the Ghosn regime centers on hiding huge amounts of allegedly unauthorized compensation coming to him and his family in many forms, from many directions. We’re talking about tens of millions of dollars that Ghosn allegedly siphoned off from hidden deals and shell corporations, and there are more sources we’ve yet to be told about, I’m sure. They’re also looking into how and why Nissan franchises were awarded to Trophy Automotive Dealer Group, a California company run by someone close to a Saudi man tied to the Ghosn investigation.

Ghosn was arrested in Japan and remains there. Nobody’s been charged or convicted of anything here, and of course everyone is innocent until proven guilty. But I predict many Nissan North America executives, at many levels, might need an attorney.

Former Nissan executive José Muñoz officially resigned on Jan. 11 amid unconfirmed reports he was not fully cooperating with the automaker’s investigation into Carlos Ghosn, the former factory head accused of financial crimes in Japan. 
 - Photo courtesy Nissan North America

Former Nissan executive José Muñoz officially resigned on Jan. 11 amid unconfirmed reports he was not fully cooperating with the automaker’s investigation into Carlos Ghosn, the former factory head accused of financial crimes in Japan.

Photo courtesy Nissan North America

The Mexico Problem

In F&I and Showroom and elsewhere, I often questioned why Muñoz was awarding prime Nissan franchises to a dealership company from Mexico. Remember that Muñoz, a Spaniard, was the head of Nissan Mexicana at a time when more 25% of all vehicles sold in Mexico were Nissans. Naturally, he became familiar with the big dealer groups there.

Then, in 2015, we learned Nissan franchises were being awarded to Mexican-owned companies in the United States, primarily targeting Texas, California, Florida, Illinois, Arizona, and New Mexico.

The question I raised at the time was this: Where did these points the Mexican supergroups were getting come from? Were they new franchises or underperforming stores under factory pressure? Either way, it felt like a slap in the face to American dealers who had invested in their companies and their communities. I said so many times.

Turns out that, by then, Nissan had already quietly been sliding in Mexican-owned West Coast franchises in California, San Francisco, Orange County, Irvine, and San Juan Capistrano. The Mexican groups were being awarded U.S. franchises, seemingly without regard for market competition. Nothing appeared to be fair and equitable in these deals. That’s when the stench of possible corruption rolled over me like a wave.

So why was I the only one screaming about this? I theorized at that time that Nissan dealers were terrorized into submission by the DOMs who acted like (in my opinion) Darth Vader’s stormtroopers. I’ve never seen dealers from any other franchise threatened like some Nissan dealers have been.

Then, at the time, I made the mistake of questioning Nissan’s relationship with Bernie Moreno.

Now, to be clear, Bernie Moreno is a U.S. citizen of Colombian heritage. I was accused of referring to him to as “Mexican,” but I never did and never assumed so. I was more interested in why he appeared to be among Nissan’s favored dealers. It felt like an unfair advantage, and my perception was based on sources inside Nissan.

Whoa! Moreno wrote a scathing letter to the editor of the magazine, denying any wrongdoing, and calling me racist. Now that hurt. You can’t pull out the race card every time someone writes about minority-owned businesses.

Then Nissan was sued by several Ohio dealers, all claiming that Moreno was given $3.75 million dollars per point to assume several Nissan and Infiniti franchises. (Moreno was not a defendant.) The dealers claimed these subsidies were illegal and not offered to anyone else in the market, creating an unfair competitive advantage. Terms of the resulting settlement were not made public. But it sure sounds like what I was claiming, and everybody else was denying, just a year earlier. My, my, my!

Now, back to Muñoz. Sources say that Nissan has a team of more than 100 investigators looking for corruption at every level of Nissan management. They are interested in Muñoz’s role in awarding vendor contracts, particularly to a parts supplier out of Mexico.

It’s amazing that all of this is coming to light years after I first wrote about it.

Muñoz was always an effervescent, bubbly guy, very likeable, I’m told. But you know, that’s what they said about Al Capone back in the day.

Let’s see where this all lands. I am predicting it’ll go deep and wide before it all shakes out. You Nissan dealers will be amazed when they finally get to the bottom of their investigations.

Author

Jim Ziegler
Jim Ziegler

President and CEO of Ziegler SuperSystems

Jim Ziegler ranks among the industry's most recognized and honored trainers, consultants, authors, speakers, and forecasters.

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Jim Ziegler ranks among the industry's most recognized and honored trainers, consultants, authors, speakers, and forecasters.

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