Volkswagen will upgrade its U.S. dealer bonus structure in July -- paying out cash based on a percentage of the sticker price instead of a flat sum, lowering the threshold for bonuses and, for the first time, rewarding dealers for used-car sales.
VW of America Chief Operating Office Mark Barnes says the revised system will improve dealer profitability.
"We modeled it with their financial statements to show what will happen in their individual cases," he said. "As they grow with us, they will reap the benefits and improve return on sales."
Barnes said he expects an additional 50 dealers to attain their monthly targets because of the new system's lower thresholds. He would not say how many dealers currently meet the targets. VW has 581 dealers in the United States.
The automaker would not provide details about the new system. Dealers say the average dealer discount stays unchanged at 9.1 percent, although some adjustment among models is planned.
Dealer sources say:
-- VW will pay a bonus equal to 0.5 percent of sticker for dealers who hit 75 percent of their monthly new-vehicle sales target. The bonus will increase to 1.25 percent of sticker for dealers who reach 125 percent of the target.
The current program pays $100 per vehicle for hitting 80 percent of the monthly goal and increases to $300 per vehicle for reaching 125 percent. VW also pays bonuses to dealers who have upgraded their stores to comply with the brand's facility standard, sources say.
-- Dealers who hit 100 percent of their new-vehicle sales target as well as 100 percent of their used-vehicle target and 40 percent of a separate certified pre-owned sales target will earn an additional 0.5 percent of sticker on all new-vehicle sales. That rises to 1 percent of sticker for hitting 60 percent of the certified pre-owned target.
-- The holdback will be cut to 2 percent of the dealer invoice price from 3 percent.