The disconnect between auto manufacturers and auto dealers isn't getting any smaller. The manufacturers want dealers that sell what they make, ask few questions, and toe the line when it comes to branding and messaging. The dealers want products that bring in customers, heavy promotional spending, cheap financing and as few restrictions as possible. It's a business relationship aimed at making both parties successful. That doesn't mean that they have to like each other.
Ideally, each auto manufacturer would like to own its distribution channel, up to and including the dealership. That would afford them complete control over branding, messaging, and "the customer experience". When it comes to a brand, image is very important. That becomes even more important for luxury brands, regardless of industry. It's difficult to control that image when you don't control the actual interaction with the customer. A national advertising campaign can only go so far. Does that message get reinforced by the dealership experience? Does the local dealership personify the sophisticated and modern feel of the brand that most luxury brands rely on?
One way to prod local dealers into "compliance" with corporate branding is to encourage them to upgrade their buildings. It's tough to sell someone an $80,000 car from a facility with plastic chairs, stained tile ceilings and laminate floors. The customer experience is much different in any modern luxury dealership. These buildings are dominated by sleek glass, steel and concrete architecture. They offer their customers cappuccinos while lounging on modern leather furniture. Everything gleams and sparkles. The atmosphere exudes wealth and sophistication. Just the thing every Audi, BMW, Lexus, Porsche, etc. is looking for.
Image courtesy of Lance Mueller & Associates
Unfortunately, these palaces of capitalism are quite cost prohibitive, costing many millions of dollars. Naturally, dealers don't care for the practice of forced upgrades and are exercising their political clout in Colorado in an attempt to minimize the practice. House Bill 1188 was introduced to shift the power in the franchisor-franchisee relationship. As originally written, the bill would have "banned auto makers from requiring upgrades of $250,000 or more to dealerships more than once every 10 year" according to the Denver Business Journal. Through successful lobbying on its part, the auto manufacturers have been able to reduce the dealer protection equations.
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