DETROIT — A study is under way to see if it makes sense for car dealers to remodel their stores to the extent that many auto makers are urging as part of assorted facility-image programs.
The National Automobile Dealers Assn. commissioned the analysis that began two months ago and is expected to be finished by late December, NADA Chairman Stephen Wade says here at a gathering of the Automotive Press Assn.
Even though study results are pending, he and fellow dealers think auto makers are asking too much of them.
“For auto dealers who have been hit hard by the recession, there is a real need for less financial pressure, not more,” Wade says. “That's what I hear all the time as I travel around the country to meetings of state and metro dealer associations.
“The one issue that comes up time and time again is concern over financial pressures from factory-mandated facility-image programs. This is true in all parts of the country and with all types of dealers, regardless of dealership size or brand.”
Dealers annually invest billions of dollars in facility upgrades, much of it manufacturer-mandated, Wade says. “These costs have a significant impact on dealer balance sheets.”
Yet, scant evidence exists on whether upgrades boost sales, help customer satisfaction or provide an investment return either to dealers or auto makers, he says.
Auto analyst Glenn Mercer, who once worked for the CIA, oversees the study. Part of it consists of interviewing dealers, customers and factory representatives, as well as architects attorneys, accountants and economists specializing in auto-retailing matters.
“The study's findings will be of use to dealers and auto makers alike, by moving the debate away from opinion and assertion toward objective facts and data,” Wade says.
In the meantime, he offers anecdotes about hassles dealers face from auto makers that insist on exacting details, right down to things such as the shade of blue for decorative tiles.
Many auto makers want dealers to build from blueprints intended to provide a consistent look, which Wade calls “a cookie-cutter” approach to design.
Clearly, dealers must maintain high standards for their facilities, he says. “I don't believe in selling Hondas out of a converted gas station.”
But, not only is it unfair to ask cash-strapped dealers to invest in major facility programs, buying trends indicate consumers prefer to do most of their car shopping online rather than at the dealerships themselves, Dale Pollak, founder of vAuto, a provider of inventory-management software, says in earlier comments.
“Why are we pushing dealers to build bigger and better ‘experiences’ when technology is making it more efficient to buy a vehicle without going to the dealership?” he asks.
Auto makers contend some facility makeovers are long overdue.
General Motors recently outlined its dealership-remodeling plans, showing before-and-after photos of redone stores. Some, in their original state, had been “an embarrassment,” says Don Johnson, a GM vice president.
“The dealers are our everyday face to consumers,” he said at the time. “We need to create a warm and welcoming retail-shopping environment.”