DETROIT — New-car dealers who have been hit hard by the economic recession need less financial pressure—not more—especially when faced with tough decisions to remodel their dealerships, said Stephen W. Wade, chairman of the National Automobile Dealers Association.
“Each year dealers collectively invest billions of dollars in facility upgrades, much of it mandated by the auto manufacturers,” Wade said in remarks today to the Automotive Press Association in Detroit. “These costs have a significant impact on dealer balance sheets, in many cases severely straining them and in some cases even persuading a dealer to leave the business rather than commit such large sums.”
Wade says one issue that comes up repeatedly when meeting with dealers across the country, regardless of dealership size or brand, is the widespread frustration dealers have with their manufacturer’s dealership image programs.
“Surprisingly, little hard evidence exists as to the return-on-investment, either to the automaker or to the dealer,” said Wade, a multi-franchise dealer in Utah and California.
Seeking an objective analysis, NADA has commissioned a fact-based study to determine both the positive and negative factors that drive the return-on-investment of facility image programs.
“The goal is to move the facilities-investment decision onto a rational, informed and fact-driven footing,” Wade said. “The study’s findings will be of use to dealers and automakers alike, by moving the debate away from opinion and assertion toward objective facts and data.”
The study is being conducted by Glenn Mercer, a former partner with McKinsey and Company, and is expected to be completed by the end of the year.
Click here for the Wade speech.
The NADA Story
In 1917, thirty auto dealers traveled to the nation’s capital to convince Congress not to impose a luxury tax on the automobile. They successfully argued that the automobile is a necessity of American life, not a luxury. From that experience was born the National Automobile Dealers Association. Today, NADA represents nearly 16,000 new-car and -truck dealerships with 32,500 franchises, both domestic and international. For more information, visit www.nada.org.