Volvo revamps dealer margin, bonus structure
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ORLANDO -- Volvo is putting a new margin and bonus structure into effect with the launch of its 2014 models.
The new structure has variable elements tied to sales performance, customer satisfaction and updated facilities. It will give dealers the potential for overall better profits, said Volvo Cars of North America CEO John Maloney.
With nearly flat sales in 2012 and a long wait for fresh product, Volvo dealers are struggling. Volvo sold 68,117 vehicles in 2012, up just 1 percent from 2011. Industry sales rose 13 percent last year.
"It's part of an overall plan to grow the business and make retailers more profitable," Maloney told Automotive News during the National Automobile Dealers Association convention here. "The highlight of the change is, we will, through margin and bonus, actually offer the highest margin potential in the luxury car business."
Volvo will offer a potential margin of as much as 17 percentage points on the S60 and XC60 and as much as 16 percentage points on other models, he said. That's an increase from today's 14 points. The changes will start with the launch of the facelifted 2014 S60 and XC60 in June and run for the next three model years.
Because variable components are linked to performance, Maloney would not say that all dealers will be more profitable. But he said any dealer who meets customer and service satisfaction targets, plus 100 percent of the sales target, will make more money for the 2014 model year.
Volvo's dealer council had input into the program, said Chip Ott, outgoing chairman of the Volvo Retail Advisory Board and a dealer in Fort Washington, Pa.
Said Ott: "We have it worked out to the point where it's good for everyone."
You can reach Amy Wilson at awilson@crain.com.
