Monday, October 05, 2009

Are Car Manufacturers and Dealers “Grasping for Salvation?

Last week Akio Toyoda, the CEO of Toyota, apologized to his customers, employees, and stockholders. He said that Toyota had suffered from “hubris” [Overbearing pride or presumption; arrogance], “undisciplined pursuit of more” and “denial of risk and peril”. He said that Toyota now is “grasping for salvation”. Akio Toyoda who is also the grandson of Toyota’s founder then said “Toyota has become too big and distant from its customers”. His confession and apology is courageous, refreshing, and encouraging. If GM and Chrysler had had a leader like Akio Toyoda, they wouldn’t find themselves where they are today. Mistakes don’t cause failures; Denial of mistakes does.

I ordered Jim Collins’ book, How the Mighty Fall, on Amazon. The author postulates that big companies don’t die suddenly but rather through five stages: (1) Hubris born of success. (2) Undisciplined pursuit of more. (3) Denial of risk and peril. (4) Grasping for salvation. (5) Capitulation to irrelevance or death. I must say that these stages describe General Motors, Chrysler, Ford, and even Toyota to a T. In fact GM and Chrysler may be in, or too near, the final stage 5, “capitulation, irrelevance, or death.

I was a Pontiac dealer in West Palm Beach from 1968 to 1999. I have lots of memories of those times, good and bad. The good times were when Pontiac was the 4th largest selling brand in the world, behind Chevrolet, Ford, and Oldsmobile. Pontiac and GM thought that Japanese cars were inferior and no threat whatsoever. I still remember the day in 1970 when the Pontiac zone manager, Murph Martin, visited my dealership and told me to get that “Jap” car off his showroom floor. He was referring to a Mazda as I had just signed a franchise agreement with that Japanese auto manufacturer. Today Pontiac no longer exists but Mazda is still going strong.

My regular readers will sense where I’m going now. Nobody can argue that car manufacturers, including Toyota, the mightiest of them all, have fallen precipitously in the past 3 years. I want to believe and I do believe that the new CEO of Toyota, Akio Toyoda, “gets it”. For him to publically apologize and acknowledge that his company was one step away from “capitulation to irrelevance or death” took great self awareness and courage. On the other hand, Ed Whitacre, the Chairman of GM, is doing TV commercials comparing GM cars to Toyota and Lexus, saying “If you can find a better car, buy it”. I have to say, “Hey Ed! Be careful what you wish for!” I would also recommend that Ed check out Consumer Reports, 2009 Best and Worst Cars, the April issue, page 17. All 34 car brands sold in America are ranked by Reliability. There is not one GM brand listed in the top half. Buick is 18th. The top 10 brands are all Asian. The bottom 10 includes GMC truck, Pontiac, Cadillac, and Saturn. Chevrolet is #24, 11th from the bottom.

But what about car dealers? In my opinion, we car dealers also have succumbed to the same temptations as manufacturers. Great success brings on hubris/arrogance. Big is never big enough and so we strive for more in an undisciplined fashion. When you make a lot of money and get lots of recognition, you feel “bullet proof”. Can you say “Bernie Madoff”? How many of us find ourselves in stage 4 “grasping for salvation”, like Akio Toyoda now? In order to successfully manage stage 4, a business owner or CEO must be courageous, but more importantly, he must have self awareness. Mark Twain said “It ain’t what you don’t know that gets you in trouble; it’s what you know for sure that just ain’t so”. I have to confess, that occasionally I start to feel a little “full of myself”. I’ve grown to be the largest seller of automobiles in Palm Beach County, the 5th largest Toyota dealer in the southeast USA. When I go out to a restaurant or shopping, lots of people recognize me and shake my hand. Now, when I get that feeling that I’m a “big shot”, I simply remind myself who it was that “brung me to the dance”… my customers.


  1. Mr. Earl Stewart
    I like what you said in this post and I truly agree with your comments. We purchased a Scion from you in 2007 for my daughter and my decision was totally based on how you run your business. People sometimes fail to realize that everything they do on a daily basis is being watched and cataloged in people's minds to form an opinion on what kind of person they are. So yes we watch and we make our purchasing decisions on our opinions so just like in sales is not just what you did then but what you do today and tomorrow. We like honesty and humility and we as consumers reward that and we will just as fast walk away from the oposite dishonesty and arrogance. Anyone in business that dismisses this is but a fool and will eventually suffer

  2. Thanks very much for the kind words, Mr. Garcia.

    Ironically, even if a car dealer doesn't "have it in his heart" to treat his customers with integrity, courtesy, and respect, he should do it simply because its good for business.

    Its not easy and today's consumer is sharper and more informed than ever. You can't "fake it". You have to walk the talk.

  3. Mr. Earl Stewart:

    Your dealership has impressed my wife and I for the last 4-1/2 years. We have purchased two vehicles from you from your internet department. We love the no hassle/no haggle internet department at the dealership. We did our reserch, found the make, model, options we wanted and our first purchased had to be ordered. It took 5 weeks. It was well worth waiting for. Our second purchase, you had in car in stock and it was delivered within three days of our initial contact. We purchased the prepaid maintenance on the cars. We have enjoyed the extended service hours on Saturdays and Sundays. It has been a big help. When you work full time, it is hard to get the car to the dealership for service during regular business hours, Monday to Friday. We appreciate the professional way in which we have been treated. The way we have been kept in the loop by the service advisor during service and quick check out by the clerk and valet who brings the vehicle up. They have all been very pleasent. In my late teens, many years ago, I lived one block from your former downtown West Palm Beach dealership. I loved the thought of how close I was to getting my vehicle worked on. We have lived in suburban West Palm Beach (by the Fairgrounds) for sixteen years. We still prefer to drive to Lake Park/North Palm Beach to keep getting such great service. About a year or so ago when I was there for service, you were making a commercial in the showroom. I watched and listened carefully to you as you worked on this commercial. During one of the short breaks, you had seen me standing just off to the side of the camera. You came over to me and asked me a question totally unrelated to the commercial. It caught me off guard. I gave you my gut response. You seemed interested in my response and I hope it was helpful to you.

    My wife and I rate your dealership and over all a 9.5 out of 10.0 Great job, keep it up. You may ask, why not a 10 out of ten? Two times when I was in for service, once, a dirty bathroom which was immediately cleaned and one other time on a Saturday morning in the last year, after your weekly sales meeting, the salesmen came out of the meeting and ate all off the bagels.

    Suggestion: if you want to keep the bagels, ok, but maybe some fresh fruit could be added.

    Ww will seriously consider another purchse with you in the next year or so.

    Respectfully submitted,

    Steven Linn & Peggy Rowe-Linn

  4. Dear Steven and Peggy [please call me Earl],

    Thanks for the kind words and for being my very good customers.

    I like your idea about adding some fresh fruit to the bagels that we provide for our service customers. Actually, my wife, Nancy, used to do this and recently asked me why we don't do it again. Nancy used to regularly bring in Fuji apples every morning. We'll give your suggestion a try.

    We wrestle with the problem of our employees "devouring" the food we lay out for our customers every mornng. We refer to our company culture as "Customers and Employees for Life". We could ban our employees from eating the bagels, but instead we just ask them to "show retraint" and be sure to leave enough for our customers. We try to make a joke out of it and hopefully "shame" those who do overdo it. Maybe the answer is just to be sure we have plenty for our customers AND employees.

  5. This posting was copied and pasted from an email, The name given was Nujean Ledbetter. I received the email yesterday, Saturday, October 10, at 7:18 PM.

    I doubt the authenticity of the name and email address because people this hateful and ignorant usually dare speak only anonymously.

    I post this email because the best cure for bigotry and ignornance is bringing it out into the bright, warm, anticeptic light of day:

    Hey earl Why don't you take your hate america diatribe and move to japan. Your stupid accessment of why Pontiac was cancelled fits your pro obama, everybody else in the world is better than we are,jackass thinking. The obama car czras cancelled Pontiac because it represents performance and not stupid little transportation boxes that jerks like you have convinced is better than anything American. I have owned Pontiacs all my life and they are way better than toyotas. I have been reading your garbage for a long time telling everyone how they should do business with dealers fees and other trash talk. Why is it you left wing jerks can't ever say why they are better? Huh? Answer that one question before you go on telling others about how you don't like my letter.No you tell some stupid correlation about what a zone rep said and somehow thats why mazda is still here & Pontiac isn't. Thats real logical. Oh I forgot,its the heart not logic that really counts. I mean if some stupid jap says he's contrite then we should buy his car. Thats makes a lot of sense. I own right now 2- 67 Pontiacs,1-2000,2-2002's,and a 2009 G8 and by the way where are all the old toyotas? huh?they rusted out and were crushed. Thats why you almost never see any old toyotas because they are junk thats made to last a few years just getting around with crappy performance and people who mostly don't understand cars buy into jackasses like you who convince them that Americans are bad. I bet my life that you #1 voted for the socialist obama#2 are a democrat and I also would like to know how you explain how GM is supposed to compete against countries that subsidize the car companies? Huh? Why weren't those factors mentioned in your cheap unsubstantiated diatribe? I would bandaid up any old Pontiac together before I would lay a dime on any jap junk. Last thats the real reason the American car companies have failed to sell as well as Toys. Its simply that #1 unions supported again by left wing anti American jerks mouthpieces like you who run this @#^%$ ( in the paper) and they have to compete against car companies who don't have huge health programs and retirement benefits instead of using that money for better cars. Even then they still beat foriegn cars today and in the last 5-10 years. I just bought a brand new G8 and though its made in Australia,its GM and they were forced into it because of jerks again who hate America just like you. So go stick your head into a woodchipper nujean


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