NEW ORLEANS -- Lexus, BMW, Volvo and Mazda discussed new facilities programs with dealers at the NADA convention, and few fireworks resulted -- a marked change from the contentiousness of some other brands' recent programs.
Volvo Cars of North America, for example, altered its program after resistance from dealers, CEO Tony Nicolosi said.
"We're removing some of the risk element," said Nicolosi. "At least the dealers have the peace of mind of knowing exactly what they're going to earn."
The revised program removes the connection to margin that was part of the previous plan, which was announced in 2013. Dealers pushed back, and executives canceled it, citing low sales and throughput.
The new program will pay dealerships that renovate up to $500 per car sold for as long as three years. Stores with exclusive Volvo showrooms and service areas get the $500 payment, and those with shared facilities will get $250 per car.
Depending on dealership volume, the revised program is expected to cover 25 to 40 percent of project costs, Nicolosi said. A typical Volvo upgrade costs about $1.5 million, he said.
Brian Allan, general manager of Galpin Premier Collection in Van Nuys, Calif., said the changes to Volvo's facility program are "extremely reasonable" and will enhance the customer experience without putting the dealer at risk.
"It'll be easy to justify the return on investment with their program," he said.
Joe Herman, COO of Kuni Automotive, a 15-store dealership group in Vancouver, Wash., said he is seeing some cases of manufacturers taking the kinder, gentler approach.
"There's a little less of one-size-fits-all," Herman said. "They're allowing some individuality and interpretive behavior."
He cited Kuni's Lexus of Greenwood Village, Colo., which opened in May. Kuni came up with several unusual elements, such as a glass floor on the second story that shows the underside of a car. The Lexus design team "helped us with that, and they allowed us to do it, and they're very happy with the results," Herman said.
Lexus dealerships have had the same general showroom design since the brand's 1989 launch. But now the luxury brand is asking dealers to change.
For starters, the color scheme of the signs will shift from black-and-gold to black-and-platinum. The exterior look will change from ribbed stucco walls to modern and glassy.
Lexus is giving dealers plenty of aesthetic latitude with three general conceptual themes, said Jeff Bracken, Lexus Division general manager. Lexus is not requiring dealers to use specific vendors or mandating which materials to use for floor tile. "We hear those stories," Bracken said, "and we don't want to be part of that story."
Bracken and other Lexus executives will present the basic ideas to dealers in February in a series of fireside chats.
Multifranchise dealer John Iacono, chairman of the Lexus National Dealer Advisory Council and owner of three Lexus stores in the New York area, says Lexus is being "mindful" with the new plans.
"They are not being prescriptive," Iacono said. "It's more an idea of what they would like, depending on local rules and culture. They're giving us a lot of flexibility."
BMW officials said during the brand's make meeting that the first 130 of its 380 dealers have committed to modify their stores by mid-2015.
The new mandatory facilities standards will be rolled out in three phases over four years. Dealers whose facilities haven't been renovated in more than six years will be required to begin updating stores this year. The second phase will affect dealerships that haven't been updated in the past six years. The third will set renovation targets for BMW's newest facilities.
BMW has discussed the standards extensively with dealers. The perception is the company is "trying to be more reasonable," said Damon Shelly, head of the BMW National Dealer Forum and owner of BMW stores in Irvine and Buena Park, Calif. "Their leadership is sensitive that BMW dealers have invested money over the years," he said.
Mazda has completed a feasibility study for new design standards that Robert Davis, senior vice president of U.S. operations, expects to be announced to dealers in about two months. He declined to disclose details of the program but said cost was a key priority.
Ryan Beene contributed to this report.