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NADA's Underriner: Factory Top-Down Control Never Works

ORLANDO, Fla., Feb. 9, 2013 /PRNewswire-USNewswire/ -- Auto manufacturer intrusion into dealer businesses, such as factory-initiated dealership renovation programs and stair-step pricing, are two critical issues facing new-car dealers, said Bill Underriner, chairman of the National Automobile Dealers Association. 

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Earlier today, NADA released a report on the Phase 2 results of its multi-year project on facilities programs. This groundbreaking research surveyed dealers,  manufacturers and industry experts, in order to determine whether these programs paid off today, in terms of the next three to five years' ROI (return on investment), and also whether they were creating the kinds of dealership facilities that would still be competitive tomorrow, looking 10 or 15 years further out.

Today: Near-Term Return on InvestmentThe new report, conducted by industry consultant Glenn Mercer, provides valuable assistance for dealers on how to approach facilities programs.

"The report provides clear guidance on when facilities programs are warranted and likely to pay off and when they are not," said Underriner, in remarks today at the 96 th annual NADA Convention and Expo, held this year in Orlando, Fla.

"Facility programs focused on brand standardization often fail to pay off," added Underriner, a Buick, Honda, Hyundai and Volvo dealer in Billings, Mont. "In contrast, facility programs focused on expansion or modernization of stores that need renovation can pay off."

Underriner added that manufacturers' facilities programs must provide dealers with flexibility in order to be successful.

"The one-size-fits-all approach is just plain wrong. There is incredible diversity among dealers," he said. "Rigid standards often raise costs and produce little return." 

Tomorrow: The Dealership of the FutureThe Phase 2 study, which also looked at the future of dealerships, indicated that "dealers are well positioned to build a stronger future," he said.

The work on future dealership facilities produced several findings, including:

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