National Automobile Dealers Association
 

Study Takes a Look at ROI of Factory Image Programs

COMMENTARY

Stephen W. Wade
 2011 NADA Chairman
Stephen Wade — October, 2011

In today’s uncertain business environment, perhaps the single most important issue for dealers – and all business owners, for that matter – is expense control. As I said in my convention speech earlier this year, “We’ve learned we can operate in ways we never thought possible … watching every penny, crossing every 't' and dotting every 'i.'"

In many ways, we’re still watching that bottom line like hawks as our industry slowly recovers. That’s why many dealers are worried about factory image programs that can require millions of dollars to upgrade facilities. In fact, it’s the one concern that I hear about the most from NADA members, regardless of dealership size or brand, as I travel around the country meeting with dealers. These costs have a significant impact on our balance sheets, in many cases severely straining them and in some cases even persuading dealers to leave the business.

Manufacturers often justify image programs on the grounds that “the store image must support the brand” and “customers expect all our stores to offer a similar look and feel.” But there’s little hard evidence of the return on investment of such spending – to either the OEM or the dealer. As a result, we make facility investment decisions based on subjective factors, such as opinions and personalities, which – as you know – is no way to run a business.

That’s why NADA has commissioned an independent, fact-based study to uncover both positive and negative factors that drive ROI – so that dealers like you and I are in a better position to make informed, rational decisions about our facilities. We expect the study’s findings to be of use to dealers and OEMs alike, by moving the facilities debate away from opinion and assertion and more toward facts and data. Glenn Mercer, an experienced independent industry consultant, is conducting the study, which is expected to be completed by year-end.

In today’s back-to-basics business environment, it’s absolutely necessary to “crunch the numbers” before making big decisions. Thanks to NADA, we just got a little help.

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