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Manufacturer-dealership relationships have evolved

Dealers today must account for strict branding control over physical appearance and operations

Published July 30, 2014

Throughout my career, I’ve maintained good relationships with the two automotive manufacturers that I represent: Volkswagen and Audi.

Those relationships are different today than they were in the 1970s, when automotive franchisees ran their businesses with a fair degree of autonomy, and with less structure and formality.

Are my relationships with manufacturers perfect? No dealer principal would make such a claim because it wouldn’t be true. Dealers and manufacturers work as productive partners on many issues, and there are times of peaceful coexistence and times of tension. What relationship is perfect?

In the 1970s and ‘80s, automobile manufacturers focused mostly on the products: they designed and produced the vehicles, determined the prices and warranties, and devised the marketing campaigns. Pretty much everything else was left up to the franchisees.

In the 1990s, manufacturers began to exert more control and influence on the physical appearance and fixed operations of dealerships. Stricter image and branding programs were introduced, which took into account things like architectural design, exterior signage, colour schemes and marketing materials.

Almost without exception, the image programs are non-negotiable and represent a huge financial burden for dealers and they come with strict rules of enforcement. In many cases, manufacturers even dictate the types of windows, lighting, flooring and furniture that a dealership must purchase.

When dealers renovate their stores or build new facilities, the new designs must conform to the manufacturer’s programs. Dealers that work in older facilities are given a timeline to plan and complete renovations to their stores or build anew.

The new programs and guidelines changed the relationship between manufacturers and dealers significantly.

Further altering these relationships has been the changing ownership structure among franchisees. In the 1970s, single-owner dealerships were the norm in Canada, whereas today 65 per cent of all franchisees are multi-franchised dealer groups.

Where do a dealer’s loyalties lie if he/she represents more than one brand? Are dealers devoting more time promoting one brand at the expense of another? These questions are part of the conversation today.

In addition to the image and branding programs prescribed by the manufacturers, there are other aspects of a dealership’s operations that affect our relationship — namely, customer service.

Today, most manufacturers monitor all aspects of our interactions and dealings with customers to ensure that we maintain certain industry standards. To measure dealers’ performance, some manufacturers will send ‘mystery shoppers’ who report back to them.

If dealerships don’t meet customer service standards, the issues are addressed, and the relationship with the manufacturer could experience one of those moments of tension.

All of this involvement on the part of the manufacturer can be exasperating at times, but the image programs are ultimately aimed at delivering an improved customer experience. They are also aimed at making dealerships perform more efficiently in a highly competitive marketplace.

Over the years, manufacturers have also introduced other valuable resources and best practices for dealers, such as ongoing sales and product training programs, corporate marketing guidelines, branded websites and online tools that allow dealers to connect with customers and suppliers.

Whether a customer visits a nameplate showroom in Vancouver, Calgary, Toronto or Halifax, the look and feel of each dealership bearing that nameplate should look same, and this is meant to reinforce the brand and the values of the automaker.

It’s no different than visiting a McDonald’s restaurant or an Apple store in different cities: some of the products may differ depending on the geographic region, but the customer experience and the values of the manufacturer should be consistent.

So, have the image and branding programs made for better relationships between manufacturers and dealers? Between dealers and their staff? Between dealers and customers?

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