Don't Punish Dealers Who Did Upgrades

Auto makers should come to the aid of dealerships that are suffering the financial pain of having invested heavily in new facilities when times and sales were better.

So says Gary Dilts, senior vice president-automotive for J.D. Power and Associates, and one-time head of sales for the Chrysler unit of the former DaimlerChrysler AG.

“Dealers have gone through a lot,” he says at a Las Vegas automotive conference hosted by J.D. Power. “Many invested $25 million to $35 million at the request of auto makers who desired quality facilities. The problem is: How do you pay for it now?”

Toyota Motor Sales U.S.A. Inc. dealers are in relatively better shape to meet their building-loan obligations in the face of the economic downturn, he says. “But what about GM (General Motors Co.) and even Ford (Motor Co.) dealers? This is a battlefield.

“Dealers that did put the investment together and put up buildings seem like they are now being punished for doing so.”

Affected dealers must get some level of care and support from their respective auto makers, he says.

Most dealers have figured out a way to do business in a constrained market by cutting costs and focusing on back-end operations to compensate for softer vehicle sales, Dilts says, adding auto makers have fewer options.