For some reason, vehicle manufacturers remain convinced that creating a handsome new dealership is going to result in more vehicle sales, ignoring the fact that what the store really needs is to have some models in the showroom that knock the socks off customers.
I know of a dealership in the Detroit area that five years ago was located in a less-than-favorable part of town. And the facility had obviously seen better days. But the store represented a car line that folks wanted to buy, and it prospered.
I am sure that after a suitable amount of flogging, the dealer finally gave in and moved into a fine-looking new showroom. And I would be willing to bet that it does not sell any more vehicles today than it did five years ago — after spending who knows how many dollars on facilities.
At least two major automakers are currently updating their dealership networks across Canada, too.
Sure, you have to invest in your service department. The latest equipment is required to make sure customers' vehicles are repaired and running properly. And yes, dealers need to invest in their people. As vehicles become more complicated it is important that technicians are properly trained and that sales staff can instruct owners on how to operate their new vehicles.
But how important is new tile in the restrooms? For some reason, factory executives continue to want a whole string of such improvements, regardless of whether they add to the dealership's sales numbers.
Millions of dollars are spent every year to make dealerships around the country all new by someone's standards. And then another five years passes and a new executive team from the factory wants a different color of tile.
It is very important to invest in your franchise. But somehow the right idea of how and where to invest is getting lost. There are a lot of ways to spend that will make for bigger dividends than redoing the brick and mortar.
If dealerships are allowed to make those investments they will sell more cars and create happy customers.