Time for a re-negotiation

At the age of 5 Matthew has his good days and his bad.  Actually they go in cycles where he will have 3 to 4 bad days followed by 3 to 4 good days.  For punishment, we have tried many different approaches but the one that up till now we felt worked the best is the time out.  He is sent to a chair in the dining room to sit and we set the timer.  

He had been good for a few days with no timeout when we were driving home the other day.  We stopped the car and as I was helping him out of the car he said to me, "Daddy, I don't think you should put me in timeout anymore when I am naughty because I don't think timeouts are making me be better."

So he is telling me, "Dad, we need to re-negotiate the whole punishment thing.  Cause what we got here isn't working for me or you."