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I Hear Distant Drums

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The classic movie conjures up a sense of foreboding and the inevitability of a showdown. I’m seeing something similar in the auto industry.

“Distant Drums” with Gary Cooper has always been one of my favorite movies.

It is sort of cowboys-and-Indians in the Florida Everglades during the Seminole uprisings; an Eastern Western, so to speak.

In the film, you faintly hear the war drums far away. It conjures up a sense of foreboding and the inevitability of a showdown. I’m seeing something similar in the auto industry.

Sales of electric cars, plug-in hybrids and alternative-powered vehicles are a fraction of U.S. light-vehicle sales. The public is not going along willingly, so it appears the government will try to force-feed us these vehicles. And, of course, auto makers are charging into EV development and production. 

Mark Reuss, president of General Motors in North America, predicts EVs still are the “wave of the future.” I’ll go along with that, to a point. But they’re certainly not in the near future.

Look at sales of the extended-range Chevy Volt EV. They tripled in the past year. Yup, Volt sales surged to 23,461 units. Consider that. Based on numbers I’ve seen, a third of Volt sales are to the U.S. government and Volt suppliers’ fleets.

Do the math. Let’s pretend all Volt sales were retail. Even then, every Chevy dealer in the country only would average nine Volt sales for the entire year. Who knows how many of those went into loaner or demo service. I know dealers who drive them as personal vehicles.

If any other model showed such dismal delivery numbers a few years into the sales cycle, it would be discontinued. Suzuki outperformed Volt, and it is shutting down its U.S. operations.

Dammit Ziegler, why are you picking on GM? Actually I’m not as much as pointing a finger at a government agenda.

The Volt is a wonderful car. It’s the best of the bunch. I have said that repeatedly.

But I don’t buy into the fantasy that these cars are viable and consumer demand is enthusiastic.

I have read all of the reasons analysts and auto makers say EV sales are not taking off. You know the list. They cost a lot. They have limited range. There aren’t enough charging stations for them.

Why are auto makers jumping into such a small pool? 

I love Fiat/Chrysler CEO Sergio Marchionne. He reminds me of, well, me. People don’t know what to make of him (us). Where I really relate to Sergio is that you never know when he’s serious or putting you on.

When the press asked why he would be willing to lose $10,000 a unit to sell a Fiat 500e EV in California, he kind of gave the impression he would sell enough of them at a huge loss to smooth out average fuel-economy obligations across other model lines to meet California’s ridiculous mileage demands.

Could all auto makers dump EVs and hybrid plug-ins on the market for the same reason? Yes.

The other shoe will drop as more alternative-fuel cars come out. Right now, gasoline tax is a major source of state and federal revenue. When and if that diminishes or goes away, does anyone think the politicians aren’t going to find other tax-revenue sources?

We’ve heard talk about taxing mileage, or how far you drive. Maybe they’ll put a black box in your car to record that for tax purposes.

The government will always protect internal revenue. The state of Washington began charging EV owners an additional $100 fee to register their cars. You’ll see a lot more of that. It will turn into thousands of dollars as other states pile on.

There’s a reckoning on the horizon. I’m hearing distant drums.

Something else:

We all knew it was coming, and now it’s arrived. Following Hurricane Sandy, the market is now being flooded (poor choice of words?) with salvaged cars.

Thousands of cars that were awash in salt water three months ago now are hitting the market with clean titles, and for the most part, clean vehicle-history reports because CarFax and AutoCheck have certain lag time in getting some information.

In most cases, seriously flood-damaged cars were scrapped. But some were dried out, cosmetically repaired, and sent to other states for re-titling.

Dealers in New York and New Jersey are not as much at risk of getting one of these units as a dealer in the Midwest perhaps. Many of these vehicles are reportedly being shipped out of the country.

It’s a dealer-beware market. There’s little-to-no possibility that experienced wholesale used-car buyers would acquire one of these units if they see it. The problem is online purchasing of inventory based on someone else’s description.

Eye-opening to me are claims that some of the insurance companies that paid for the total damage might be participating in reconditioning flood-damaged cars and shipping them out of state for resale. A sad commentary.

I just polished off a snifter of Remy-Martin Louis XIII cognac. I’m preparing for my last and final workshop performance at the annual National Automobile Dealers Assn. convention in Orlando next month.

I’m optimistic about Peter Welch becoming NADA president. He is a man of integrity and someone who is willing to fight for dealers. NADA, in my opinion, needs a major overhaul. Peter is the right man for that.

Oh well, I am at the end of another rant. Of course all of this is my opinion. I might be wrong. What do you think? Please let me know. I love to hear from you, even if you’re wrong.

Jim Ziegler, president of Ziegler Supersystems, is a trainer, commentator and public speaker on dealership issues. He can be reached at zieglerss@aol.com. WardsAuto readers also may comment on this article by logging in or registering below.

Discuss this Blog Entry 1

on Jan 28, 2013

No matter how useful or efficient new technology is, people don't turn their minds easily towards it. Specially when comes to automobiles people would love sticking to older and reliable technologies in use since years.

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What's Retail Front?

Blogs about automotive retailing, commenting on news impacting the business of selling vehicles.

Contributors

Steve Finlay

Steve Finlay is the editor of WardsAuto Dealer Business magazine. His journalism career started 40 years ago as a crime reporter. A Michigan native, he likes fast cars, big lakes and cold days.

Jim Ziegler

Jim Ziegler, president of Ziegler Supersystems, is a trainer, commentator and public speaker on dealership issues.
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