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NADA Issues Phase 2 Study Of Factory-Mandated Dealership Renovation Programs

New study analyzes Return on Investment and looks ahead to Dealerships of the Future

ORLANDO, Fla., Feb. 9, 2013 /PRNewswire-USNewswire/ -- Industry consultant Glenn Mercer highlighted the findings of the Phase 2 study commissioned by the National Automobile Dealers Association that takes a deeper look into two key areas of factory-mandated dealership renovation, also known as  facility image programs.

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The Phase 2 study analyzes the Return on Investment (ROI) of image investments in the short term, and examines whether these investments might be right in the longer term, for Dealerships of the Future. The first phase of the study was completed a year ago.

"The facility image program issue is not as painful for dealers as it was in 2010 and 2011, in part, because business conditions have improved," said Mercer, in remarks today at the NADA Convention and Expo in Orlando, Fla. "However, there is still significant room for improvement, because new-car dealers overall still give facility image programs only lukewarm support."

Return on Investment

The new study revisits the ROI issue from the Phase 1 study, but this time includes numerous individual dealership case studies, which provide more working data. The Phase 2 study essentially reconfirmed the findings from the first phase, which include:
  • Expansion of the dealership (especially service departments) can pay off well;
  • Modernization of the store is somewhat harder to justify; and
  • Standardization, which is the replication of features from store to store far above and beyond logos and signage, seems to be of no benefit at all. 

The Phase 2 study indicates that some spending provides lucrative returns, typically through the refurbishment of a totally run-down store, and that, conversely, some maintenance spending should not be expected to yield a significant return at all, because it represents "table stakes:" the minimum spending required just to stay in business. 

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