Add Point Protest
You have probably heard the story. “Sorry, but you and the surrounding dealers aren’t getting the job done. We are going to be adding a new point in the growing part of town. And by the way, as long as you try harder, there will be plenty of sales for everyone.” The establishment of a new dealership in an area already served by another dealership of the same line make is often contentious, and this familiar refrain becomes the manufacturer’s official story when these matters go to court. The Fontana Group breaks down the story into real data analysis and addresses the real questions: How is the market really performing? Are manufacturer claims of low performance in the market accurate? Are there local factors that need to be considered? How will the new dealership impact the existing dealer(s)? Does competition really increase and do customers really win?
Every car dealer has learned that you can’t sell product that you don’t have. The availability of hot product is critical to the bottom line. However, the allocation systems employed by manufacturers are also critical to the sales performance of dealers. The pressure of hitting sales targets when product isn’t available can be crippling. Most allocation systems have discretionary elements, and both these and the regular elements have been abused by manufacturers in the past. We have reviewed many of these systems and examined the critical questions: Are the discretionary allocations reasonable? How are the high demand models getting distributed? Are the manufacturers following their own protocols? Are certain dealers receiving disproportionate allocations? What is the effect on other dealers not receiving the same level of allocation?
Clients of The Fontana Group, Inc. have found themselves on both sides of brand damage and defamation allegations. Do exported vehicles that slip through the cracks really endanger a manufacturer’s well-being? What effect did a whisper campaign have on the sales of a competing dealership? Fontana has developed valid and rigorous analyses to address these questions for clients in multiple industries.
The sale of a dealership is often subject to manufacturer approval. We have investigated several buy/sell agreements that were rejected by a manufacturer and studied the important circumstances surrounding the rejection: What is the impact on the selling dealer? Were the manufacturer’s grounds for the rejection reasonable? Do manufacturer concerns about the buyer translate to the dealership at issue?
Dealer agreements are generally one-sided with little or no allowance for operator input. Manufacturers often load agreements with terms that are either vague or knowingly impossible to satisfy. While the legality of the contract can only be assessed by a legal professional, we have evaluated the economic reasonableness of various provisions that manufacturers have attempted to assert in contracts. Some of these terms can have a profound impact upon the well-being or even survival of a dealership.
Franchise termination is the business death penalty. Not only is the wealth of the dealership lost, it is often simply transferred to a preferred operator. When the stakes are so high, the justification for termination must be subjected to the highest level of analytical scrutiny. We have reviewed an extensive number of terminations and delved into the important issues: Do the manufacturer’s sales performance calculations account for the unique characteristics of the market? Are the CSI measurements reliable? Were allocations sufficient to meet the sales requirements? Has the manufacturer behaved reasonably in its dealings with the dealership?
The incentives offered to dealers by manufacturers can be the lifeblood of a business or the source of paralyzing market inequalities. Some incentive programs encourage market-friendly behavior while others have been found in violation of state law. We have evaluated incentives and studied the critical questions: Are the incentives fair? Do the incentives seize operational control from the dealers? What happens if the incentives tilt the playing field?
The relocation of a dealership in an area already served by another dealership of the same line make is often contentious. Most states have specific statutes governing the situation, and we are well versed in the relevant factors for consideration: How will the new dealership impact the existing dealer(s)? Are manufacturer claims of low performance in the market accurate? Are there local factors that need to be considered?
Warranty reimbursement is currently a hot topic. Dealerships, manufacturers, and government entities are debating the merits of warranty reimbursement at retail rates and the question of cost recoupment? Are these policies consumer-friendly? Who wins and who loses when warranty reimbursement rates change? Fontana has been a leader in assessing these questions for years.
The Fontana Group has extensive experience tackling complex issues in and out of the automotive industry. The Fontana Group employs its analytical expertise and extensive experience to develop credible findings, which lead to credible and persuasive expert testimony. Studies and testimony from Fontana Group experts have been used to support verdicts, findings, and settlements in courts and other tribunals throughout the country.
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The Fontana Group has the systems and facilities required to accomplish difficult assignments. These include:
- Computer models for market forecasting
- Financial statement analysis
- Spatial analysis
- Statistical and GIS software expertise
Our computer graphic techniques include full-color maps depicting census tract characteristics and purchasing behavior, bar charts, pie charts, and histograms.