Some retailers are getting increasingly vocal about not doing dealership renovations. There's often no clear return on investment for the millions of dollars spent updating designs or changing the colors of tiles or poles, they say. And they have a fair point.
In a business that is increasingly going online — 83 percent of consumers want to complete at least one purchase activity online, away from the dealership, a 2018 Cox Automotive study reports — why put millions of dollars into a Taj Mahal?
It's true the dealership is still an important venue. Most purchases are completed there and will be for the foreseeable future. And don't discount the importance of an inviting service department sized to match demand. Automakers are right to make sure the locations selling and servicing their products are modern, convenient and inviting.
But there are few tired or rundown dealerships left. Dealers who survived the Great Recession faced pretty immediate pressure from many automakers to update their stores or build new. And many did. Updating them again, less than 10 years on, seems pointless to a dealer in an era of tighter new-vehicle margins and uncertainty about the role dealerships will play in 20 years.
Dealers even point out the hypocrisy of automakers pushing for brick-and-mortar investment by retailers at the same time that the companies are making it easier for consumers to sidestep the dealership with new investments in subscription programs or other mobility services. It has some retailers, including the public dealership groups, divesting stores over concerns about pressure to pay for renovations.
No dealer wants a dump. But instead of spending millions on a new design scheme, dealers would rather invest in pathways to success in online retailing or mobility fleet maintenance.
In the long run, that could pay off — for them and the automakers they represent.