ATLANTA — As the auto industry began to emerge from the Great Recession, dealers facing pressure to make pricey updates to their buildings balked. It was too soon, they said; business hadn't recovered enough to invest millions of dollars in glossy new dealerships.
Fast-forward to the present. Sales have rebounded, and dealerships have posted some of their biggest profits ever in recent years. But unless a store is too small or otherwise in obvious need of refreshing, many dealers are still reluctant to spend on expensive building projects.
Why waste millions, the thinking goes, to update an already-nice building to satisfy an automaker's latest design whims?
Such projects aren't likely to generate a dollar in return on investment, many dealers contend. Moreover, today's dealership designs may not even be the right fit for a future expected to be dominated by digital retailing and other disruptive technology.
Still, automakers continue to push dealers for new and redesigned buildings. And dealers comply because, in many cases, adherence to automaker image program standards is necessary to earn certain payouts.
In 2018, dealer Steve Kalafer spent $1.6 million to renovate his "perfectly functional" Infiniti dealership in Flemington, N.J. There was bonus money on the line.
"We haven't sold one more car," Kalafer said. "In fact, because the market's turned, we sold less cars. I had to terminate two employees to bring my expenses in line, so I could show people a new coffee machine and a new fascia."