New-Car Dealers Question Factory Image Programs, NADA Reports

LAS VEGAS — While new-car dealers see value in clean, modern retail facilities, many have questions and are not convinced that the factory upgrades they are being asked to complete will result in an increased return on investment, according to a study by Glenn Mercer and issued at a press briefing during the 2012 NADA Convention and Expo in Las Vegas.

“These programs — intended to encourage dealers to invest in store expansion, modernization and standardization — can place significant financial burdens on dealers, yet there is little hard evidence on the return of investment this spending might yield,” Mercer said.

In response to dealer concerns, NADA commissioned the “Factory Image Programs” study last August to provide an objective, unbiased and neutral analysis of the various factors that drive the economics of facility programs, according to the association.

“The NADA research project brought all the various perspectives on this issue out into the open by speaking with a wide range of industry participants,” Mercer said. “Our goal was to open up a dialogue in which all parties could discuss facility requirements on a more rational, informed and fact-driven footing.”

Based on interviews and discussions with automaker executives and a diverse selection of dealers, recommendations were provided to both parties, such as working together to reduce some of the tensions that exist over these issues. The executive summary and full report are available at www.nada.org/facilitystudy.