Audi of America wants to boost dealer profits and have more stores upgraded -- even if it's at the expense of corporate margins, says Johan de Nysschen, executive vice president in charge of the brand.
Audi will propose new terms to its year-old dealer contract that will include increasing a profit margin that dealers say is the lowest among luxury makes. The three-year contract runs through the end of next year.
Audi will discuss the issue at its annual dealer meeting in Orlando, Fla., on Tuesday, Feb. 14, after the National Automobile Dealers Association convention.
De Nysschen says low profits have prevented dealers from building new stores or upgrading existing ones. Only 92 of Audi's 267 dealers have upgraded their showrooms to the New World of Audi design rolled out five years ago.
"We have gotten to the point where there are dealers who want to invest in upgraded facilities but can't make the business work because of the low margin structure," de Nysschen says. "We need to find a mechanism to resolve that."