Glenn Mercer at NADA/IHS Automotive Forum

I attended the NADA/IHS Automotive Forum in New York City on April 3. Glenn Mercer gave a short presentation entitled "Retailing Trends and Overview of the NADA Facility Study". After his presentation, he sat on a panel with several dealers as they discussed the automotive retailing industry and how facilities work in that equation.

There was considerable reference to his study during the discussion. Mercer said that there has never been an independent study of manufacturer facilities programs which is really striking considering the vast sums of money dealers are asked to spend by the manufacturers.

Very few dealers argued that they had a responsibility to provide a clean, modern facility that was "supportive of the brand". That ANY dealer would argue that is troubling and is a possible clue as to why these facility programs are so heinous.

He asked the questions of car buyers, "What matters most to you when it comes to selection of a dealer from which to purchase an automobile?". Facility was at the bottom of the list of considerations. Which begs the question "What does the dealership of the future look like?". Are these programs helping us getting closer are pushing us further away from the industry's model of the future?

The manufacturer needs to show better demonstration and quantification of the VALUE of the investment in facilities. After the most recent downturn, all dealers are demanding a better return for their investment, whether it is advertising, janitorial or some other service. Dealers must see a path to return on investment.

Mercer said that the programs don't scale well for smaller, rural dealers. He suggested that the manufacturers need to tier the programs to remove the "small store cost penalty". There is no perfect program for all dealers, large and small, urban and rural. However, when you have large dealers giving the green light for ANY upgrades just to keep the money coming and small dealers trying to figure out how to borrow money for the changes, it is fairly obvious that program doesn't work in a small, rural setting (read GM's EBE program).

A couple of other interesting quotes from Mercer: "Floor tile was the single most complained about subject in the entire survey over four months!" & "Supportive of the brand" is an OEM mantra.

Mercer does a very good job or presenting an independent, unbiased view on this issue. NADA needs to use him strategically.