Should 'stair-step' incentive programs come to an end?

Would dealers and the auto industry as a whole be better off without stair-step incentive programs? Paul Walser, CEO of Walser Automotive Group in Bloomington, Minn., thinks so.

In stair-steps, manufacturers pay steadily increasing bonuses to dealers to meet a series of volume targets, typically as part of a monthly sales promotion.

Walser, who operates 11 one-price dealerships in the Minneapolis-St. Paul market, told me last week that the stair-step “prostitutes the cars.” Dealerships dramatically undercut each other on price to maximize bonuses. He calls stair-steps desperate, short-term measures for the weak.

It's not just a domestic-brand problem, Walser says. Some Asian manufacturers offer them, too. But give credit to Subaru and Hyundai, he says. Walser hasn't seen stair-steps from those brands of late. He then points out that Subaru and Hyundai have been two of the industry's biggest sales winners.

Coincidence?

25

Shares

ATTENTION COMMENTERS: Over the last few months, Automotive News has monitored a significant increase in the number of personal attacks and abusive comments on our site. We encourage our readers to voice their opinions and argue their points. We expect disagreement. We do not expect our readers to turn on each other. We will be aggressively deleting all comments that personally attack another poster, or an article author, even if the comment is otherwise a well-argued observation. If we see repeated behavior, we will ban the commenter. Please help us maintain a civil level of discourse.

Newsletters