Two-Tier Pricing, Mandatory Upgrades Concern Dealers

Two-Tier Pricing, Mandatory Upgrades Concern Dealers

The National Automobile Dealers Association (NADA) is tackling two contentious issues facing new car dealers in the U.S. today: two-tier pricing programs and mandatory facility upgrades.

Speaking to the Automotive Press Association in Detroit, Bill Underriner, the NADA’s chairman said these issues are “symptoms of a bigger overall problem – manufacturer intrusion into dealers’ businesses.”

The NADA has created a special task force that’s looking into two-tier pricing.  This is a practice where automakers tie a dealership’s incentives to sales goals.  This gives large stores an advantage because they sell more vehicles, which allows them to get better prices from the manufacturer.

This is something the NADA says is unfair because it ignores how diverse dealerships really are.  Some are privately owned, while others are publicly traded. Some are located in big cities but others do business in small towns.

Mandatory facility upgrading is another issue the NADA is researching.  Oftentimes automakers require dealers to renovate their stores, something that can cost millions of dollars.  The association is pushing manufacturers to have more accommodating upgrade programs because, again, not all dealers are the same.

Underriner said “when programs are not flexible and don’t consider local conditions, there is a much higher likelihood of pushback and controversy.”