When quality problems and labor unrest forced Volkswagen to halt production at its Puebla, Mexico, plant in 1992, Volkswagen of America Inc.'s 686 dealers were left without Jettas and Golf models to sell.
In 1991, the two nameplates made up 53.6 percent of the brand's U.S. volume, and the redesigned 1993 versions were being counted on to reverse VW's sagging fortunes in the United States.
Concerned about how its dealer body would survive the product drought with only Passats, Corrados, Cabriolets, Foxes and EuroVans, VWoA began giving cash payments to its dealers.
"It wasn't just a check, it was loyalty" to our dealers, says William Gelgota, VWoA's current director of dealer relations and brand integration.
"The decision was made to try to keep our dealers solvent. We wanted to keep our infrastructure together so when the turnaround came we'd have that infrastructure to sell the cars."
Automotive News on Dec. 7, 1992, reported that VW gave $5 million to help the dealers and their sales staffs. VW paid the cash based on individual dealers' average monthly sales for Golfs and Jettas for the 12 months prior to Nov. 1, 1992. The payment to single-line VW dealers was $1,000 per unit. Dual dealers got $700 a unit.
Recalls Gene Langan, of Gene Langan Volkswagen Inc. in Glastonbury, Conn., "It kept a lot of guys in business."