Facility Upgrades: ‘Your Voice Is Being Heard’

William P. Underriner — May 2012

COMMENTARY

Underriner
2012 NADA Chairman
In response to widespread dealer concerns, the National Automobile Dealers Association commissioned the first-ever study on factory facilities programs last year, which resulted in an objective and fact-based analysis of the various factors that drive the economics of facility image programs.

The NADA research project was authored by industry consultant Glenn Mercer. Our goal was to open up a dialogue in which all parties could discuss the issue on a more rational and informed basis. With this in mind, Mercer spoke to a wide range of industry participants.

I’m pleased to report to you that since the report was completed in early February, we have been able to personally meet with and present the study’s findings to the senior-level management of 12 manufacturers. Having personally attended most of these meetings, I can tell you this was an encouraging first step, with constructive and positive two-way discussion.

It’s time now to take this issue to the next level. NADA will be retaining industry experts to do a deeper dive into the issue in the following areas:

1. Is There Value with Regard to Investment in Facilities? Let’s Run the Numbers.
The first recommendation in the study was that OEM’s need to better demonstrate and quantify the value of dealer investment in facilities. Overall, this was an area of disappointment, with most manufacturers failing to show the value of facility image programs. Phase Two will look deeper into this area by “running the numbers” ourselves. To attempt to quantify the return on investment (ROI), we’ll look at actual dealership data in a sample of dealers who took on facility image programs as well as ones who did not.
2. More Dealer Input
Another recommendation from the first phase of the study was to get more dealer input into these programs, but well before “the cake is already baked,” when dealer input could really make a difference with regard to how these various programs are received by dealers at large. A good first step will be the addition of specific questions about facility image mandates to the twice-yearly NADA Dealer Attitude Survey (DAS). The DAS is the most effective method of getting a cross section of dealer input directly to the OEM’s at the highest levels. Watch for this in the next survey coming in July.
3. Dealership of the Future
This project will combine interviews with industry experts and case studies with a focus on answering the question: “Are we investing in the kind of dealership that will be most competitive in 2020 and beyond?” The intent is to go much further than the recent report from Auto Team America entitled “Dealership 2025.” Interviews with industry experts will be supplemented with case studies of changes in other retail industries as well as cutting-edge car dealers who may already provide us with a glimpse of the dealership of 2020.
4. An Annual Review
NADA will conduct a review on the one-year anniversary of the facilities study that will focus on whether the OEMs have modified their facility mandate programs in response to concerns raised in the study. During the initial round of individual meetings with the OEMs, many indicated that they would take the study’s findings into account and consider making changes.  Follow-up interviews with OEMs and key people who participated in the original study should provide the necessary feedback to determine what changes, if any, have been made.
As you can see, we’re moving further into some of the key findings of the first study with the intention of conveying the results directly to all of your manufacturers. In addition, we’ll continue to keep this issue front and center in our DAS meetings with your OEMs in the coming months. This issue wasn’t started overnight and won’t be solved overnight, but I want to assure you that your voice is being heard. 

Bill Underriner
NADA Chairman