Is GM’s image program fair? Depends who you ask

Automotive News | February 4, 2012 - 8:23 pm EST

LAS VEGAS -- In the battle between dealers and automakers over facility image programs, General Motors has taken the most shrapnel.

That’s mainly because GM has the most dealers -- about 4,500 -- and its image program is perhaps the industry’s most far-reaching.

Because I cover GM, I’ve talked to lots of dealers about this. Full disclosure: I haven’t done the sort of comprehensive and likely high-priced study on image programs that was commissioned by NADA and presented here today. Nonetheless, here’s my take.

First, a quick primer. GM pays bonuses to dealers who agree to overhaul their stores, along with some lighter-lifting requirements like employee training. The cash is based on vehicle-order volumes.

We’re talking big money. It can range from $40,000 for small dealers to $1.5 million or more for big ones.

One conclusion: Most dealers like the program, or at least they don’t hate it.

Some bigger dealers boast that, by the time GM’s program expires in 2016, they’ll be paid far more in bonus cash than they spend overhauling their stores.

Even many who won’t cover their full construction costs are glad to take the extra dough. They might not think that a facelift will sell more cars -- many don’t -- but they figure it could help service business by giving customers the choice of sitting in a sleek café rather than a grimy quick-lube waiting room.

The vocal minority

Now, for the vocal minority that hates the program. Two aspects draw the most ire:

1) It’s rigid.

Dealers who’ve redone their stores in the past decade claim they’ll have to rip out perfectly good tile or toss out nice furniture to comply. And dealers whose stores are in a historic district or rustic ski town, for example, complain that elements like Chevrolet’s bright blue tower are out of place.

GM says its field personnel handle those on a case-by-case basis. It’s impossible to quantify how much slack is getting cut in the field. But I’ve talked to enough dealers to conclude that, in many cases, there ain’t much.

2) Small dealers get short-changed.

These small dealers have the biggest legitimate gripe. That blue Chevy archway might cost them 50 grand -- no different than a dealer who is 10 times more profitable. And here’s the rub: That big dealer might be getting paid five or 10 times more GM bonus cash than the smaller dealer because of his bigger volumes.

Why should a small dealer only cover one-third or half of his renovation costs, while a big dealer actually profits on the deal?

GM has already said that it’s not interested in an “image light” for small dealers, as the NADA study suggests. Perhaps they worry that granting exceptions to some dealers and not others will raise questions of fairness.

But, at least on the issue of small-dealer compliance with GM’s image program, fairness is already out the window.

Mike Colias covers General Motors for Automotive News.Mike Colias covers General Motors for Automotive News.

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