Updates on the Facility Front

A story on NorthJersey.com - Hackensack, NJ details the story of a former Cadillac Hummer dealership on which dealer Tony Fernandez spent $9 million to build a Quonset-hut-style showroom and service center shortly before General Motors dropped the truck brand. So, over the past year, at an additional cost of about $1.2 million — financed with a second mortgage — Fernandez has remodeled his former Hummer facility to comply with GM's EBE standards so that he would not be cut out of crucial cash incentives from GM.

In the article, Tom Henderson, a GM spokesman, says about 1,000 dealers have completed or have begun facilities upgrades. "We think it's a fairly generous program," he said. "A majority of our dealers are pretty satisfied with it."

That beeping you hear in the background is the bullshit detector going off (why does it always go off when GM executives are quotes?). In fact all the lights are on and it's smoking — I don't know exactly what that means, but I have a hunch. Perhaps Mr. Henderson would like to show us some data on all those dealers who are satisfied with GM's facility image program. You can count me as one dealer who is signed up for it but is not even remotely satisfied with it. I can tell you that I've talked to many others.

"It's a voluntary program open to all dealers nationwide. We do pay [compensation] on a quarterly basis tied to specific metrics, to defray the costs," he said.

"Voluntary" Mr. Henderson says. I suppose Henderson will tell me that the IRS considers my April 15th obligation "voluntary" next?

In this Automotive News article, Weimar, Texas, Chevrolet dealer, Tommy Brasher does a great job of making the small and medium size dealers' case. I agree with his assessment in that I like the look of what they've asked me to do with the outside of the building. I just don't like their desire to control every aspect of my facility.

But Brasher sympathizes with other small dealers who are hard-pressed to finance a teardown or relocation. In many cases, he says, customers in those small towns won't be impressed by a glitzy new showroom anyway.

James Ziegler rings in here on this issue. I completely agree with his last paragraph:

This subject is at the center of every discussion in every dealer group I have interacted with in recent months. I believe 2012 will be the year this issue becomes a full-scale battle between dealers and certain auto makers. I predict auto makers will back down as dealers become more resistant and united.

This is the topic of conversation at every dealer meeting I attend as well. I hope that Ziegler is right with that last sentence!