Changes to your dealership’s AOR can have big consequences

By Hilary Holmes Rheaume

This article originally appeared in the December issue of Powersports Business.

When was the last time you received a letter from an OEM notifying you that your dealership’s area of responsibility (AOR) was being expanded or reduced? Did you take the time to analyze how that change could impact your sales performance, or did you simply file the letter away?

Too often, dealers choose the latter approach and fail to recognize that an AOR adjustment can significantly affect performance metrics until it’s too late.

Why OEMs adjust AORs

It’s common for OEMs to modify a dealership’s AOR, which is often based on census tracts or other geographic criteria. While a letter announcing an AOR change may seem routine, the implications can be substantial.

OEMs are increasingly reevaluating territories as part of broader strategies to adapt. Recent trends show OEMs are tightening control over dealer networks and experimenting with new distribution models. For example, OEMs may consolidate or redistribute AORs for many reasons, including:

• Digital retailing and omnichannel models: As more consumers shop online, OEMs are adjusting territories to create customer experiences across physical and digital channels.
• Network consolidation: Some OEMs are reducing AORs or adding new points for additional market coverage and/or to prepare for direct-to-consumer strategies.
• Performance pressure: OEMs use AOR changes to push dealers toward higher sales targets and increase customer satisfaction scores.

These trends underscore why AOR changes are not administrative details, but strategic moves that can reshape your dealership’s competitive landscape.  These changes often manifest through AOR adjustments, which can impact your competitive position overnight. 

Impact of expansion

If your AOR is expanded, expect your sales performance calculations to decline. OEMs typically measure dealer performance as a percentage of average sales penetration within a state or region. When your AOR grows, the total number of regional sales used in the calculation increases, which makes it harder for your dealership to maintain the same penetration rate. In other words, you could go from being a top performer to appearing underperforming overnight.

Impact of reduction

Conversely, if your AOR is reduced, it may signal that the OEM plans to add a new dealership in or near the territory removed from your AOR. You will likely also lose OEM-driven marketing and warranty recall opportunities for customers in that area.

What should you do?

When you receive notice of an AOR change, act immediately:

• Compare territories: Review your current and proposed AOR side by side. Consider geographic factors, such as mountains, rivers, or major highways, that influence customer behavior.
• Assess competition: Determine whether the new AOR increases competition with existing or future dealerships.
• Communicate concerns: Raise any objections with the OEM in writing. If the OEM does not address your concerns, you may have a statutory right to protest under your state’s franchise law.

Legal remedies and considerations

If you believe an AOR change will harm your dealership, you may have legal recourse under your state’s franchise laws. These statutes often prohibit OEMs from making arbitrary or unreasonable changes to a dealer’s territory. Remedies can include filing a protest with your state’s motor vehicle board, seeking injunctive relief, or pursuing damages for lost business opportunities.

Beyond legal action, consider proactive strategies:

• Data analysis: Quantify the impact of the AOR change on your sales performance metrics.
• Customer outreach: Strengthen relationships in areas you may lose and expand marketing in new territories.
• Operational adjustments: Evaluate staffing, inventory, and marketing plans to align with the revised AOR.

Know your deadlines

Most state franchise laws impose strict timelines for filing a protest — often as short as 45 days from the date you receive notice. Missing that deadline could mean forfeiting your rights, so act quickly.

Bottom line

Changes to your AOR are not administrative details; they can reshape your dealership’s competitive landscape and performance metrics. Stay vigilant, analyze every change, and consult legal counsel promptly if you have concerns. Protecting your dealership starts with paying attention.    

Hilary Holmes Rheaume, Esq., Attorney at Bernstein, Shur, Sawyer & Nelson, P.A., Manchester, New Hampshire. She can be reached at hrheaume@bernsteinshur.com.