Auto brands' huge and growing push to get dealers to invest six- and seven-figure amounts in brand-enhancing showroom overhauls has just come to shove — in this case, a shove-back by a mega-dealer who has bristled at what he calls anti-competitive practices by General Motors.
Norman Braman, former owner of the Philadelphia Eagles and owner of dealerships in Florida and elsewhere, has sued GM over the company's Essential Brand Elements program, alleging that the controversial initiative amounts to two-tier pricing in violation of federal law. Braman's reasoning is that dealers who refuse to go along with all of the physical and service enhancements callled for under Essential Brand Elements are discriminated against because they don't qualify for the generous incentives that GM offers dealers who fully comply.
"Are we back to the old philosophy, 'If it's good for General Motors, it's good for the country?'" Braman told Automotive News. "That philosophy died a long time ago. This whole situation has just reached a point where dealers have to do something about it."
The "situation" industry-wide is that the Great Recession wiped out hundreds of American auto dealers across many brands. Now that industry sales are recovering, and presumably only financially healthy dealers survived the carnage, OEM brands figure that these dealers can afford to help automakers in the intensifying battle for share in the U.S. market.
Retail appearances and in-store experiences are becoming more and more important to consumers, the brands believe, and so just about all of them are leaning on dealers, offering carrots and sticks, to make investments in new and expanded facades, new showroom innards, enhanced service departments, and even separate facilities to house new but thinly supplied brands (such as what Chrysler has forced its dealers to do to get a Fiat franchise).
All automakers are trying to help their dealers with the requirements in various ways ranging from shaving wholesale prices to offering free architectural consulting to GM's new program to help Chevrolet-dealer advertising groups across the U.S. with "Under the Blue Arch," a co-op marketing initiative that provides Hollywood-quality creative for local dealer ads (watch below) instead of the stale, sometimes-laughable ads produced and aired by the retailers and their local dealer co-ops. ("Under the Blue Arch" is also on Facebook.)
But beyond the financial demands of these new branding requirements, dealers are coping with another reality: It's getting tougher for them to get people to come to their showrooms in the first place, especially younger consumers. In fact, a new survey shows that "forces of graying" are significantly disfavoring traditional brand-based dealership service departments at the expense of aftermarket chains such as Midas. The dealership is becoming a "senior center" as younger consumer segments are gravitating toward aftermarket chains for their service needs, according to a new report by DMEautomotive, a Daytona Beach, Fla., consulting firm.
So consider Braman's suit only the next punch in what will likely be a 15-round battle between insistent auto brands and proud, entrepreneurial, resourceful dealership groups.
Below, watch a couple of GM's Under the Blue Arch customizable local spots; more are uploaded to GM's YouTube channel.