Audi of America Inc. has armed its dealers with a potent lineup of cars.
Now the company wants to make certain that its dealers can take full advantage of the cars.
Audi has recruited Paul Hagan from Land Rover North America Inc. to improve its network of 258 dealers in the United States and 34 in Canada.
Hagan, 44, joined Audi in late February as dealer network development manager. It is a homecoming for Hagan, who had worked for Audi and Volkswagen in sales and dealer development from 1982-90.
Hagan wants to increase the number of exclusive Audi dealerships, develop hiring guidelines and training programs for dealerships and persuade dealers to adopt best business practices.
For example, Audi knows a high percentage of its customers first use the Internet to obtain product information and pricing before entering a showroom.
'We have to design the way we do business to accommodate people who want to shop via the Internet, who want to communicate with us using electronic means,' Hagan said. 'Most dealerships aren't prepared to handle that.'
Audi's objective is to raise the perception of the franchise to the public, Hagan said during an interview with Automotive News in Auburn Hills, Mich.
Those dealers with stand-alone Audi showrooms are averaging double the annual sales of the other Audi dealerships. Audi currently has only 25 exclusive dealerships in the United States.
But about half of the Audi dealers in the United States have some plan of brand separation in the works, said Jerry Miller, who has an Audi-Porsche dealership in Conshohocken, Pa., in suburban Philadelphia. Miller is almost finished separating the two brands. When done, Audi and Porsche will share only the parts department, he said.
'The bulk of the Audi dealers are leaning toward some sort of separation,' Miller said. 'They see the potential and think it's a worthwhile investment.'
In 1993, Audi dealers sold a mere 12,528 vehicles. Last year, they sold 47,517 vehicles, and Audi just recorded its best first quarter since 1986. The redesigned A6 sedan with quattro led the charge.
Hagan acknowledged that approaching dealers about exclusivity is much easier today.
'To invest in an exclusive store five years ago wasn't going to make a lot of sense,' he said. 'Now the dealers see the potential in the product. They see the marketing. So they are excited about it as much as we are.'
Hagan said he gets up to 10 calls a week from dealers asking for an Audi franchise.
At Land Rover, Hagan helped dealers establish exclusive Land Rover Centres.
'We had definite standards in terms of how that business should be conducted,' he said. 'I think the same will be true as we roll out the Audi program.'
Audi already has a blueprint of sorts for dealers who want to build an exclusive Audi store or upgrade their existing store.
'Certainly in the key markets we'd like exclusive representation,' Hagan said. 'There's enough business to support it.'
However, in some smaller markets, he might look instead for a separate Audi showroom and dedicated Audi service technicians.
The uneven distribution of Audi vehicles has caused some dealers to hesitate, said dealer Miller, who is chairman of the national Audi dealer council. For instance, Audi dealers in Florida are not getting enough product, while Northeastern dealers are getting too much, Miller said.
Audi has in the past provided some financial assistance to dealers who wanted to go exclusive. Hagan expects that to continue.
Miller said financial assistance based on a dealer's volume and degree of separation has been a big impetus for separation. He said the move toward exclusivity would be slowed if assistance were discontinued.