HERNDON, Va. — Audi dealers now are among the industry's most profitable. But Audi has traveled a "rocky road" with its U.S. dealers, Audi of America President Johan de Nysschen says.
In 2007, Audi introduced a new margin and bonus system. It required dealers to sell used cars and work harder for what had until then been guaranteed bonuses. It also raised the overall payout per car.
"They thought it was very complicated," de Nysschen told Automotive News at Audi's U.S. headquarters here this month. "The dealers were, of course, entirely right."
But it wasn't wrong, he said. "It was the appropriate medicine. One of our dealers, in fact, said to me: 'Looking back, it's still medicine that I would like to spit out. But there's no denying that everything you guys said would happen has happened.' "
In 2008, net profit at Audi's 190 exclusive dealerships increased 30 percent, despite Audi's U.S. sales falling 6.1 percent to 87,760. Industrywide, sales fell 18 percent.
Audi's past policies were very bureaucratic, a criticism often leveled by dealers, de Nysschen admits.
On Jan. 1, Audi loosened up how it allocates vehicles. Before, vehicles were allocated based solely on market potential. Audi's new approach bases half of the allocation formula on dealer sales performance.
"If the dealer is selling well, he will earn more cars," and those who aren't won't suffer inventory bloat, de Nysschen said. "Sometimes the simple things make a big difference, and you wonder why you didn't do this earlier."