LOS ANGELES - Daewoo Motor America, struggling to achieve mass-market sales numbers with a small-town budget, will reduce sales salaries in favor of larger commissions.
The switch starts May 3 for salespeople at Daewoo factory stores in California, Massachusetts and New York.
Previously, a salesperson was paid $30,000 a year in salary, plus a $75 per unit commission on six to 10 cars sold a month and $150 spiff per unit on more than 10.
An internal Daewoo document obtained by Automotive News states that the new plan pays salespeople just $6 an hour for a 40-hour week plus $9 an hour overtime. But salespeople gain commission from the first vehicle sold.
The commissions range from $200 for the first unit to $450 if a salesperson can sell 30 cars in a month. But a salesperson must sell at least 10 cars a month to exceed pay received under the old plan.
BACK TO HAGGLING?
A factory-store salesperson, who declined to be identified, complained that the new commission structure is misleading because it forces him to split a commission if a referral customer comes into the store.
Since Daewoo's marketing effort is based almost entirely on referrals and networking, rarely will a customer come cold into a dealership, the salesperson said. That means a salesperson actually has to sell more than 20 cars to break even with the old plan, he said.
Another potential pitfall: Putting salespeople on a commission system is at odds with the company's no-hassle, no-haggle policy, a Daewoo insider said. High pressure on salespeople to sell translates into high pressure placed on the customer to buy.
Bill Tucker, Daewoo Motor America's vice president of marketing and customer relations, disagreed. 'The new program still has a substantial base salary, but a salesman can make substantially more money than under the old program,' he said. 'A little more incentive structure will make it more lucrative for our customer consultants to sell. We are not abandoning our ideas about treating the customer the way he wants to be treated.'
Tucker said he is happy with Daewoo's per-store sales average. But the firm's total sales still are small. The company said it sold just 2,110 cars in the first quarter of 1999.
KOREANS GO HOME
In other recent developments:
Daewoo sent home most of its Korean community advisers, who were brought in to develop sales contacts within the tight-knit Korean enclaves in several metro markets. Tucker said the move was planned, since the South Korean nationals' visas were due to expire.
Daewoo will pay a broker fee of $300 on the Lanos, $400 on Nubira and $500 on Leganza for any brokered deal.
These latest developments follow a laundry list of problems faced by the company, including the late-March layoffs of two-thirds of its U.S. headquarters staff in Los Angeles.
Daewoo still is facing a lawsuit by commission-only college student salespeople who contend they are employees who are owed wages and benefits.