General Motors has embarked on what it believes to be the most substantial dealer image transformation in the automaker’s — and possibly even the auto industry’s — history. By 2016, the automaker expects 2,500 of its 3,000 Chevrolet dealerships to complete a set of voluntary renovations, an undertaking that is expected to total a hefty $3 billion collectively. Similar programs are in place for Buick, GMC, and Cadillac dealerships.
According to Alan Batey, who until recently served as President of Sales and Service at Chevrolet, the sheer scope of the non-compulsory program shows just how much Chevy stores need it. In fact, back in 2009, when the program was first launched, only five percent of Chevy dealers met corporate standards — the lowest in the industry; what’s even more eye-opening is the estimate that 60 percent of Chevy stores were built before the mid 1970s, putting Chevy at a competitive disadvantage when compared to close competitors such as Toyota, Honda, and Volkswagen.
“We were well overdue for this massive network makeover. We needed to transform the look and feel of our franchise,” Batey told Auto News back in May. It was definitely one of the key strategies we needed to implement to be successful.”
Voluntary… Or Not So Much?
While GM is touting the program’s optional nature, dealers who choose not to participate may not receive extra bonus cash from GM — giving them less leeway in bringing down prices when locked in a bidding war for customers. This can directly translate to possible lost sales of customers who would purchase an automobile from a direct competitor. Those dealers that fulfill the new dealer image program get incentive money that can range from $50,000 to $100,000 a year for smaller stores and be as much as $1.5 million for the bigger stores.
Another disadvantage for the stores that opt out of the changes will likely be the general impediment seen by customers who are cross-shopping a competitive brand with what could be described as “nicer” and “better” showrooms that improve the overall image of the vehicles and the brand. And while some dealers completely support the renovations and agree that the changes are necessary to remain competitive — despite the temporary inconvenience to customers in the form of construction and renovations — others are still opposed to them.
According to internal documents obtained by GM Authority, to comply with the dealer-image program, Chevy dealers are required to have a bright-blue archway with aluminum panels and a silver fascia. That seems like a reasonable requirement, but how about the fact that all signage — such as the printed “Chevrolet” marque as well as the neon-blue signs with the dealer’s name — has to be ordered from the Pattison Sign Group in Knoxville, TN? Stringent requirements like these make some dealers resistant to the program.
Specific facility design guidelines don’t end there, as a plethora of other requirements are often vendor-specific:
- The light gray floor tile needs to be a specific shade of gray and be a minimum of 12 inches by 12 inches in size; ideally, the tile should by 16×16; the striped pattern that runs perpendicular to the showroom facade is preferable.
- The light wood furniture should be supplied by non other than Herman Miller.
- The greeter station is a non-negotiable requirement across the board, even if it won’t have anyone sitting at it.
- The distance between the sales desks and the main customer entrance needs to be at least 20 feet.
- Sales offices need to have glass fronts and glass doors while an explicit shade of blue, silver, or orange paint needs to adorn the rear walls of any offices that face the showroom.
- At least five framed images must be present in the showroom, preferably installed in pairs or groups. Walls 12 feet or longer should contain 3 frames; walls between 5 and 12 feet in length should have 2. These can only be purchased from one vendor — DCI Marketing of Milwaukee.
- DCI is also the sole provider of display stands for wheels and other accessories that are part of the program’s requirements.
- Customer lounge chairs must be ordered from a supplier that charges $1,500 per unit.
- Dealer awards of any kind should not be in the showroom, while a special kind of halogen light is called for in order to “present the Chevrolet vehicles to customers in the best possible light”, read the guidelines
Some dealers call the demands of the dealer image program micromanaged, demanding, and inflexible, especially when it comes to vendor-specific requirements and control over the renovations. Those not in favor of the GM-arranged prerequisites say that they could save money by obtaining items from other vendors; furthermore, GM Authority has also received several letters from dealers, with those in small towns reporting a negative sentiment towards “the new and shiny stuff” from their patrons, who are used to the homely, small, family-owned business feel of their local dealers.
In retrospect, many stores that have already completed renovations have written to GM Authority stating that the results looks great and that they are proud to have excitement, again, in their store as well as the rebirth and the plethora of exciting new vehicles from their brand.
The GM Authority Take
Barring a few outlying exceptions — such as the small town instances — GM’s dealer image transformation program is a vital necessity that has been a long time coming.
Moreover, the tightly-controlled nature of the renovation requirements set out by GM is a substantial positive in our book, as it will present the Chevrolet brand — as well as other GM brands — in a consistent and homogenous fashion around the nation, and we assume — eventually — the world. This is a vital part of building brand value, trust, and credibility — aspects that should be the cornerstones of every product and brand offered by GM going forward.
Sure, some dealers could have obtained certain items for less; but we have a hunch that the savings would be minuscule in the grand scheme of the renovations and it’s very possible that the savings would have even resulted in an inferior product — because, let’s face it, dealers aren’t interior designers or decorators — while GM undoubtedly did the leg work on its end to set the specifications of the program in motion.
Ultimately, it should be all about the customer and the customer experience — something the dealer renovation program seems to highlight faultlessly; in fact, we like to think of Apple and the uniform Apple store experience as the benchmark for an exceptional retail program. Those that are familiar with Apple would be quick to point out that Apple owns and operates all of its retail stores. That said, it’s our opinion that GM did the best it could with dealerships that aren’t under its full control. As one dealer recently told us, “it’s GM’s show and we [the dealers] are the actors.”