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\ABS\Auto Blog Samurai\data\insurance\wwwallstatecom\pricey+renovations+to+showroom+floors+haven+t+always+yielded+more+sales+for+dealerships_16000325_800638963_0_0_7076950_300.jpg "Pricey renovations to showroom floors haven''t always yielded more sales for dealerships.")
New-car dealers have implemented a number of renovations to their showroom floors that have cost millions of dollars to install, at the behest of auto manufacturers. Automakers say that these upgrades are worthwhile, as it improves the customer buying experience, and in so doing, the chances someone will buy a new car.
But because many dealers haven't fared as well in sales this year as in years past, the National Automobile Dealers Association wants proof from automakers that the renovations implemented will ultimately pay off.
Renovations have 'significant impact on dealer balance sheets'
"Each year dealers collectively invest billions of dollars in facility upgrades, much of it mandated by the auto manufacturers," said Stephen Wade, chairman of the NADA during a speech at the Automotive Press Association held in Detroit. "These costs have a significant impact on dealer balance sheets, in many cases severely straining them and in some cases even persuading a dealer to leave the business rather than commit such large sums."
He added that the NADA wants to get proof from manufacturers that the renovations are warranted because based on his assessment, there has been little evidence suggesting the money spent has been a good investment.
Discord between dealerships, automakers
According to The Detroit Press, relationships between dealers and manufacturers have been strained for the past several years. An example of this involves Chrysler, as in 2009, the automaker dropped nearly a quarter of its dealerships as part of its bankruptcy restructuring, putting thousands of people out of work.
Chrysler's plight has been shared by others. According to data collected from NADA, the newspaper reports that that there are 17,700 dealerships nationwide as of December 2010, nearly 800 fewer than there were in 2009.
Objective analysis commissioned by dealerships
While dealers wait for automakers to respond, NADA says it has commissioned an independent analysis that will help them determine their return on investment after implementing showroom renovations.
"The goal is to move the facilities-investment decision onto a rational, informed and fact-driven footing," said Wade. "The study’s findings will be of use to dealers and automakers alike, by moving the debate away from opinion and assertion toward objective facts and data."
The NADA expects to receive the results of the study by the end of 2011.
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