Author Interview: Steve Lynch of Arrogance And Accords

As promised, here’s the interview with Arrogance and Accords author Steve Lynch.

SK: Have you run into and spoken to any of the dealership owners described in the book after publishing it? What were their reactions to the book?

SL: I ran mainly into dealers with Honda and Mercedes franchises as I spent the better part of my career with MB calling on dealers. All of them knew about the scandals through reading Automotive News and the book brought the back story to life. Most of them felt it was pretty cool that I did it. They long suspected what was going on. It was also a relatively small number of dealers who were involved in the corruption and it was mainly people involved at the higher level in terms of money passed. It was around 700 total Honda dealers. [The investigation] identified maybe 80 to 100.

SK: Do you think the handling of Acura as described in the book affect Acura’s perception and its car sales numbers to this day?

SL: Acura started in 1986 and they got off on the wrong foot in many ways by not having a dealer agreement like Lexus did- ‘here’s how to treat customers, here’s how to do this’ and they were awarding franchises to their buddies rather than picking the best candidates. But the mistakes kept compounding over the years, starting with the 5-cylinder Vigor, they dropped the great names of Legend and Integra, it just seems like it’s gotten worse over the years. The brand has been snake-bitten right from the beginning. Hyundai started in 1986, and look how far they’ve come. I think Acura, as long as they keep rebranding Honda products, it’s never going to be a world-beater. It won’t be on par with Lexus. I think the [Acura] dealer body is much better than their earlier days due to a lot of changing after the first ten years with how they pick their dealers, I think their dealer body is fine now.

SK: Did you still stay in sales after your time with American Honda?

SL: I was in a few positions at MBFS (Mercedes-Benz Financial Service). Most were dealer facing. I was a marketing manager for a small division of Mercedes-Benz Financial. I was sentenced to a year on the Chrysler side as an auction rep. I was dealer relations manager for Mercedes-Benz Financial in Texas. [Later] I was the manager with the best job in the field sales finance business [of MBFS]. My territories were San Diego, Orange County, Las Vegas, and Hawaii. I was finally regional insurance manager on the West Coast [for MBFS]. Dealer positions are all sales, promoting products and services, so yes.

SK: Did writing Arrogance and Accords significantly affect your career trajectory in the automotive industry? Did you find you were hitting a wall for promotions in subsequent jobs, companies weren’t considering your resume, people actively made sure you weren’t hired, etc.?

SL: I was concerned because there were a lot of people had the perception that I was a whistleblower; indeed I was not a whistleblower because the book came primarily from the tens of thousands of pages generated from the Freedom of Information Act from the FBI investigation and federal trial. I was actually recruited to work for Mercedes-Benz Financial Services, so I never did find out. Prior to joining Mercedes-Benz, Germany had to review the manuscript and I had to delete a paragraph about a corrupt Mercedes-Benz sales rep in Louisiana back in the 70s. But even though I had concerns, when you have the kind of honor on you from your background combination that I have which is retail car experience, factory car experience, and a college degree you can pretty much write your own ticket in most car companies.

SK: Did you have any alternatives?

SL: I could always go back to the retail car business. They’ll hire anybody.

SK: Were the executives who solicited kickbacks even passionate about Honda or was it mainly about the money for them?

SL: How could you not be passionate when you were the hottest brand anywhere? That was part of the intoxication of working for that company. The media loved us, the customers loved us, the dealers loved us. Our problem was that we began to think that our success was due to us individuals and not the great cars themselves. There was an incredible amount of passion working for that company.

SK: How did the service and parts divisions of American Honda react to the kickbacks to the sales division? Was there any indication that those divisions received money from the dealers too?

SL: Their reaction was always ‘We knew what was happening the whole time’ when in fact they didn’t have a clue what was going on because [the corruption] was so well-concealed and there was never indication that they got involved in anything at all. They were in a different world than we were in sales. My reps in service were in total shock when it came out. But we in sales knew.

SK: Do you consider your book to be required reading for dealer allocation people at other automakers?

SL: I have heard that there have been meetings held among management years ago at other car companies on dealer-facing staff where my book was discussed. I’m sure it happened, I’ve heard nothing but rumors.

SK: Were Honda customers impacted in the prices they paid by the dealer bribery scandal?

SL: I wish they had been because then I would’ve sold a million copies of the book. The reality is the market determined what the cars were worth whether it was $2,000 over sticker or sticker or $1,000 over sticker, that was still determined by the market and dealers who paid, say, an extra $500 a car for an extra load of cars could not pass that on to the consumers because they couldn’t sell the cars then. The prices were never adjusted because of the corruption. [The feds probably would’ve found that out.] There was an upper limit. When we were selling cars for $2,000 over sticker they were still a better value than the domestics down the street by far.

SK: Why didn’t any of the executives find an exit strategy to leaving Honda (getting dealerships, retiring early, switching jobs) instead of looking to embezzle money from Honda through the advertising scam?

SL: A few people gave themselves open points (new dealerships), but I think most of us didn’t want to give up the lifestyle and whether dirty or clean I don’t remember people ever leaving Honda. We were down the street from Toyota and Nissan in Torrance and I don’t recall any person leaving us for Toyota. I remember one person going to Nissan, so it rarely happened. There was a couple dealers in New Jersey who were former execs who gave themselves points and that’s all I remember. You had to work, you had to give up your lifestyle and work harder. Plus, the guys who gave themselves points also had to find an investor because [it costs a lot] to open a dealership so they were only limited partners.

SK: What advice would you give to people who wanted to publish a book or write an article about the delinquent practices within the company they worked for?

SL: If you don’t have absolute documented proof of the problems, don’t do it. Go to human resources. Most companies these days are now so deep into compliance that HR should be able to take care of it. I was lucky that the FBI laid out all the information for me and I saw a lot with my own eyes. Otherwise, it would lead to problems.

SK: What are your favorite automotive industry books?

SH: There are two books that are like my bibles. One is My Years with General Motors by Alfred P. Sloan. It is a handbook about how General Motors developed their strategies and organization in the 20s and 30s. It’s just phenomenal how it all still applies to the car business today. The other is Brock Yates’ Decline and Fall of the American Automobile Industry. It’s kind of the opposite [of Sloan’s book] about how it all fell apart and what’s interesting about this book is that so much of it is about the arrogance of Detroit and how a lot of it still applies today and it was published in 1983. Both these books just are amazing after what you read in them still today regarding the car business.

SK: What did your friends and family think of you writing the book?

SL: My late father was a journalist. My brother’s written two books. My niece was a sportswriter for a Midwestern major newspaper. So it’s kind of in the family, it was not that big a deal. I had quite a bit of support.

SK: Thank you for the interview.

SL: Thanks.

Steve will answer any follow-up questions you may have. Please leave them in the comments below.