The sizzling debate: Will renovation boost profits?
Jason Stein is editor of Automotive News
There's a car dealer in Michigan who has a dilemma: Some time ago the dealer made extensive renovations to his store. New fireplace, new tile, new paint scheme.
The factory says anything older than five years needs a renovation.
His problem: He made his changes 51/2 years ago.
Gentleman, start your jackhammers.
Forget the players involved for a moment. If one theme has dominated this convention, it's the upgrades.
Some dealers don't see the return on investment, and they can't fathom how they'll have the financing conversation with the bank.
"I'll say, 'Sir, can I borrow $2 million?'" said another dealer, who asked not to be named for fear of retribution from General Motors. "And I can just imagine the banker saying, 'Sure! Show me the return on investment!'"
In this story there is plenty of frustration, but the issue of facility improvements isn't going away soon.
Some Detroit 3 dealers feel betrayed. They say that one year of good times doesn't justify a call for big renovations. The factory says the improvements will ensure consistency.
Where do you draw the line? And who decides how much is enough?
NADA consultant Glenn Mercer said both sides need to "turn down the heat" on the conversation.
It's only going to get hotter.
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