Dealership Evaluation Systems

Car dealers perform a series of activities whose ultimate purpose is to sell vehicles and services to customers. The activities take place within a framework of business agreements and legal requirements. A dealership evaluation system (DES) ascertains whether the activities achieve the business goals and meet the requirements during the time period observed by the evaluation. Activities, business goals, and requirements are the three basic elements of any DES. How good is the evaluation at measuring dealer behavior, discovering and communicating problems, and coordinating solutions? How effectively do the manufacturers and dealers use dealer evaluations? In this paper we review methodological aspects of DESs, examine how manufacturers and dealers use the results of the evaluation, discuss serious problems with both methodology and uses, and report on two scientific studies of actual DESs. Finally, we present an alternative evaluation methodology, one that views dealers as the main users and beneficiaries of the DES without neglecting the legitimate goals that manufacturers have concerning business results and compliance with agreements. 1 Dr. Mora is a research faculty, Eastern Michigan University College of Business, [email protected] 2 Dr. Leutscher is a postdoctoral fellow, University of Michigan, [email protected] Dealership Evaluation Systems 2 What is a Dealer Evaluation System? Car dealers perform a series of activities whose ultimate purpose is to sell vehicles and services to customers. The activities take place within a framework of business agreements and legal requirements. Business agreements are negotiated between dealers and manufactures on a regular—usually annually— basis and generally include sale volumes, marketing, quality goals, and branding issues such as signage. Legal requirements are more permanent and involve compliance with local, state, and national laws and ordinances. A dealership evaluation system (DES) ascertains whether the activities achieve the business goals and satisfy agreements and requirements during the time period observed by the evaluation. Activities, business goals, and agreements are the three basic elements of any DES. How good is the evaluation at measuring dealer behavior, discovering and communicating problems, and coordinating solutions? How effectively do the manufacturers and dealers use dealer evaluations? Dealership Activities Legal Requirements Business Goals Dealership Evaluation System Met?