If the Shoe Doesn't Fit...

Our NADA summer board conference was a very good meeting with open and free dialogue among directors. Upon hearing the directors' concerns, NADA chairman Bill Underiner decided to appoint a task force that will push for changes in manufacturers' facility renovation programs and incentives that lead to perceived two-tier pricing. 

I was very pleased when Chairman Underiner appointed me to serve on this task force. If you have visited this space before, you know that I am particularly sensitive to the treatment of smaller, rural dealers as it relates to those two areas. I will be viewing the proceedings of this task force from that standpoint.

This task force will challenge General Motors to find a way to offer dealers, especially smaller dealers, some options to comply with reasonable standards at a cost effective price. I will be looking for a way for GM to ask ALL of its dealers to help build their brand but not require the same "elements" of every dealer, regardless of size, market or geography. I am not naive enough to think that will be an easy task.

I had a dealer friend ask me if I thought General Motors should abolish the Essential Brand Elements (EBE) program and wondered what I thought they should do with those who have already made a commitment. I think that is a great question and I believe it is one that the task force had better be prepared to deal with.

There are serious questions about the role of a showroom facility in the rural setting and the importance  the customer places on that. It is becoming less a factor in the buying process as the customer goes a long way into that process in our virtual showroom - our web sites. I question whether ANYBODY at GM has thought hard and long about that.

I personally believe that General Motors has every right to expect ALL dealers, big and small, rural and metro, to have a clean, welcoming facility that projects a strong brand image for the manufacturer that they represent. There is more than one way to do that. I don't think that necessarily means a renovation every 5-6 years. I certainly do not believe that it should be part of a marketing program.

As far as EBE is concerned, I think there is a place for the program. I believe the requirements are far too stringent for smaller dealers and the economics of both the investment and the reimbursement program set forth by GM do not work for smaller volume dealers. When you have such large number and wide spectrum of dealers, it seems that at least three levels of participation would be warranted.

Does it make sense that the exact same program requirements (showroom tile, a $5,000+ greeters stand, complete glass on three sides of the showroom, etc.) would work equally well for a Chevrolet dealer in a rural community selling ten to twelve new Chevrolet vehicles each month and a metro dealer selling a thousand new vehicles per month? Does it make sense that a showroom facility in a northern climate with cold winter wind and snow be the same as one that resides in the sun belt? 

General Motors tells the dealers that it is a "voluntary" program. If you are not in compliance, however, you will missed out on the EBE quarterly payment of between $500 and $750 per vehicle. This in a business where the customers will walk over $50!! 

EBE is not a voluntary program. The greater your sales volume, the better it seems to work for you. I know dealers who are telling their people to build whatever it is that GM wants, just keep the EBE payments coming in. I have talked to other dealers who, if they project their EBE payments out through the end of the program, they won't amount to half the costs they are being asked to incur to make their facility compliant.

Not every foot does fit in a size 10 shoe. In fact, in this case, not everyone wears a size 20 shoe! If you do, the EBE program fits pretty well. But if you don't, you end up buying a lot more shoe than you need and the shoe is to be priced according to its size!