NADA studying return-on-investment of facility image programs

(October 26, 2011) 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 last week 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.