Are automaker dealer image programs worth it?

Are automaker dealer image programs worth it?

The National Automobile Dealers Association (NADA) has launched an independent study to look at the cost effectiveness of automaker image programs that require new-car dealers collectively to invest billions of dollars each year in facility upgrades.

NADA Chairman Stephen Wade says paying for image programs can severely strain dealer balance sheets and in some cases even cause the dealer to give up the business rather than commit to such a large investment.

NADA has undertaken this fact-based, objective study to uncover both the both positive and negative aspects that drive return on investment (ROI) so that dealers are in a better position to make informed and factual decisions on facility investments.

The perception today is that the decisions made by dealers on facility investments are often based on opinions, pressure and personalities, which is no way to guide significant spending, Wade said. We want to find out the truth so these important decisions can be based on facts, not perceptions.

Surprisingly, little evidence on ROI to either manufacturers or dealers exists. Factory programs are typically justified on qualitative grounds such as, the store image must support the brand, or customers expect all our stores to offer a similar look and feel, he said. Solid economic arguments such as, updated stores sell X more cars for every $1 million invested or CSI scores soar when a facility is upgraded, are generally absent.

By moving the facilities debate away from opinion and conjecture and more towards facts and data, we expect the findings of the study to be extremely valuable to dealers and manufacturers alike, Wade added.

The study will be performed by industry consultant Glenn Mercer and is expected to be completed by late November. Mercer is a former partner with McKinsey & Companys automotive practice. For more information, contact Jake Kelderman at WANADA, jak@wanada.org, (202)237-7200.