Special Coverage

NADA Convention & Exposition

LAS VEGAS – Expect Volkswagen of America Inc. to amend a contentious new dealer bonus plan unveiled here at the 2007 National Automobile Dealers Assn. convention.

However, dealers breathe a sigh of relief that product promised to them during the tenure of Wolfgang Bernhard is still in the pipeline. Bernhard was replaced as brand chief Jan. 1 by former Audi boss Martin Winterkorn.

During the question-and-answer session following the presentation of VW’s plan, grim-faced dealers stormed out of the room one by one. They used words such as “horrible” and “terrible” to describe the program, designed to reward superior sales performance, high standards for customer service and exemplary facility management.

“There are a lot of disgruntled people,” one dealer says.

Another complains: “They’re not listening.”

But apparently VW is listening. An insider tells Ward’s the auto maker is fine-tuning the plan, which:

  • Offers increased incentives based on three new levels of performance.
  • Rewards dealers who can demonstrate they employ proven customer-service processes.
  • Pays a bonus for maintaining facilities that properly represent the brand.

Despite the uproar, Adrian Hallmark, executive vice-president, insists VW’s program is fair. The change is simply a shift from “one system to another,” he says.

“But in the transition, you get some people that immediately benefit from the change,” Hallmark tells Ward’s in an exclusive interview immediately after VW’s dealer meeting.

Dealers claim the smaller stores get shortchanged.

Says Hallmark: “We’re going to reward people as we have in the past. If they’ve invested in the franchise, they get a bonus. If they can demonstrate they’ve got good customer processes, not the (customer satisfaction index) scores, but just the five simple steps to look after customers, they get a bonus for that. And according to their sales performance, they get different levels of bonus.

“The only difference, compared with what we’ve done in the past, is how we’ve set the sales targets.”

In addition, VW is setting up a flying squad of staffers dedicated to helping dealers meet the auto maker’s expectations.

“We’ve got eight people dedicated that will go out and help them fix their problems, or tell us where we’ve got problems that are causing them to underperform.”

Count Connecticut-based Langan Volkswagen among the contented dealers. “It’s all positive,” Glen Langan says, describing what he heard.

Mike Sullivan of Volkswagen Santa Monica, the nation’s second-largest VW retailer, is unfazed by the proposed changes.

“Product is the pillar,” he says. “The cars that we throught were approved under Wolfgang Bernhard are still approved.”

Among the products considered critical to VW’s success are the Tiguan small cross/utility vehicle, scheduled for introduction as an ’08 model, and a 4-door car with dramatic coupe-like styling expected in about 18 months, dealers say.

Before these products arrive, however, VW will introduce a new line of diesel-powered vehicles. The auto maker’s diesel program currently is on hiatus as it strives to meet tough new U.S. emissions standards.