Dealers confront carmakers over two-tier pricing, forced upgrades

In a speech for the Automotive Press Association in Detroit, the chairman of the National Automobile Dealers Association (NADA), Bill Underriner, laid out the two most important issues it seeks to address with carmakers: two-tier pricing and compulsory dealership facility upgrades.

The former is more easily understood as bonuses for sales targets sell X amount of cars, receive X amount of extra gravy from the carmaker. The bonuses also escalate, so that a certain sales target beyond X means a proportionally larger bonus than was had at the previous target. NADA's contention is that practice results in favortism that ignores the size and diversity of dealerships. Larger dealers can offer lower prices and sell more cars than smaller outlets, with the effect of potentially creating different pricing in the same markets, the bulk of the bonus money then going to the larger dealerships and improving their positions.

The second issue is about giving dealers a larger voice in the matter of "facility image programs," such as what dealers had to do to get the Fiat 500 and, more recently, the SRT guidelines about what dealers will be required to do in order to sell the new Viper. Building out a new showroom with mandated facilities can cost millions, and NADA wants earlier and more input into the programs to ensure they work on the local scale and that the changes endure. Said Underriner, "We want to know whether we are investing in the kind of dealership that will be most competitive in 2020 and beyond."

The dealer body has created task forces to investigate both issues. An NADA press release is below, Underriner's full speech can be found here.
Via: Dealers confront carmakers over two-tier pricing, forced upgrades