"We just want to make sure we're all walking in the right direction and monitoring and encouraging the right behavior," said Patrick Womack, forum chairman and general manager of Laurel BMW of Westmont in suburban Chicago. "My goal [is to] immediately start on discussion of 2019 and beyond. We want to discuss and monitor things that are within a dealer's control."
Dealers had objected to changes in the program announced last year, particularly two new components that measure and tie parts of the bonus to the proportion of BMWs a store services in its market as well as the number of customer defections to other brands. Megadealer Norman Braman is suing BMW in federal court in Florida over the program.
Under the previously announced guidelines, the percentage of dealerships projected to fall out of eligibility in the two new categories — dealer sales loyalty and service effectiveness — had been well over 10 percent. With those components responsible for 70 percent of the possible AVP bonus of up to 5 percent of a vehicle's sticker price, missing the targets would be a major financial hit for dealerships.
"Over 90 percent of our dealership profitability is AVP," Womack said. "It's a huge impact to the dealers."
In addition to relaxing some metrics, BMW also agreed to additional steps if 10 percent of dealerships fall out of eligibility on the sales loyalty and service effectiveness components.
If that happens, BMW has agreed to meet with dealers about further adjustments aimed at making more stores eligible.
At the Las Vegas meeting, Shaun Bugbee, BMW of North America's executive vice president of operations, told dealers that the automaker wants to have 100 percent of the dealer body earning the AVP bonus going forward, Womack said.