Phone: 630-495-2282 Fax: 630-495-2260 Map/Directions
 

Study looks at ROI of factory image programs

October 14, 2011
By Mark Scarpelli, Chicago Metro NADA Director

In today’s uncertain business environment, perhaps the single most important issue for dealers – and all business owners, for that matter – is expense control. As NADA Chairman Stephen Wade said in his convention speech earlier this year, “We’ve learned we can operate in ways we never thought possible . . . watching every penny, crossing every “t” and dotting every “i.”
 
In many ways, we’re still watching that bottom line like hawks as our industry slowly recovers. That’s why many dealers are worried about factory image programs that can require millions of dollars to upgrade facilities. In fact, Wade says it’s the one concern he hears about the most from dealers, regardless of dealership size or brand, as he meets with dealers around the country. These costs have a significant impact on our balance sheets, in many cases severely straining them and in some cases even persuading dealers to leave the business.
 
Manufacturers often justify image programs on the grounds that “the store image must support the brand” and “customers expect all our stores to offer a similar look and feel.” But there’s little hard evidence of the return on investment of such spending, either to the OEM or the dealer. As a result, we make facility investment decisions based on subjective factors, such as opinions and personalities, which – as you know – is no way to run a business.
 
That’s why the NADA has commissioned an independent, fact-based study to uncover both positive and negative factors that drive ROI – so that dealers like you and I are in a better position to make informed, rational decisions about our facilities. We expect the study’s findings to be of use to dealers and OEMs alike, by moving the facilities debate away from opinion and assertion and more toward facts and data.
 
Glenn Mercer, an experienced independent industry consultant, is conducting the study, which is expected to be completed by year-end.
 
In today’s back-to-basics business environment, it’s absolutely necessary to “crunch the numbers” before making big decisions. Thanks to the NADA, we just got a little help.
 
In legislative/regulatory news:
 
• There are several important federal regulations that govern the advertising of leases and credit. Dealers, their advertising agencies and others responsible for the content of dealer ads should be familiar with these regulations. But dealers ultimately are responsible for ensuring that all of their ads comply with the applicable rules.
 
If you advertise consumer leases, then your ads must comply with the rules for lease advertising found in the Consumer Leasing Act and Regulation M (“Reg M”). If you advertise consumer credit, then your ads must comply with the rules for credit advertising under the Truth in Lending Act (“TILA”) and Regulation Z (“Reg Z”).
 
All required disclosures under Regs M and Z – not only the trigger terms, but also the required follow-on disclosures – must be made “clearly and conspicuously” to be compliant. For more information, see www.nada.org/regulatory_affairs/news/Featured+Stories/CreditAdvertReminder.htm
 
• The Federal Trade Commission has announced updated fees for telemarketers accessing phone numbers on the National Do Not Call Registry. Beginning Oct. 1, 2011, and ending Sept. 30, 2012, telemarketers must pay $56, an increase of $1, for access to the DNC Registry phone numbers in a single area code, up to a maximum charge of $15,503 for all area codes nationwide, an increase from the previous maximum of $15,058.
 
• In late 2010, Congress passed the “Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010,” which reinstated the estate tax retroactively to the beginning of 2010. For people who died in 2010, it included a provision that permits their executors to opt out of estate tax and apply the carryover basis rules that applied before the estate tax returned.
 
The IRS recently issued guidance on this procedure, in the form of two publications: Notice 2011-66 (www.irs.gov/irb/2011-35_IRB/ar09.html), which establishes the timing and manner of the election; and Revenue Procedure 2011-41 (www.irs.gov/irb/2011-35_IRB/ar10.html), which provides guidelines on allocating basis increases among assets under the carryover basis rules.
 
• Scholarship America recently held an emotional “Evening of Remembrance” in New York to thank donors – including Bob Mallon of the National Automobile Dealers Charitable Foundation – that contributed $1 million or more to support the educational needs of the September 11 families. Lauren Segel, the president of Scholarship America, said the event was organized for the families who wanted to publicly thank “those who contributed so much and so meaningfully in the dark days following the September 11 tragedy.”
 
Immediately following the 9/11 attacks, the NADA Foundation created the Survivors Relief Fund and launched a national fundraising campaign. In a matter of weeks, dealers contributed $1.6 million, making it one of the most successful charitable campaigns since the Foundation’s inception in 1975. More than 3,000 students could qualify for scholarship aid through 2030, the year the last of the 9/11 students will be eligible for university.
 
 
 

Back