Audi dealers climbed out of a hole at the end of 2019 by selling off bloated inventory of certain models that was dragging down new-vehicle margins. Now, thanks to incentive programs from the factory that are configured monthly instead of quarterly, the brand's dealers have better tools to control their inventory, said Tony Newell, chairman of the Audi National Dealer Council.
Newell is general manager of Audi Stevens Creek, a busy dealership in San Jose, Calif., that is owned by Penske Automotive Group. Newell said efforts to change the incentive and dealer bonus structures at the end of last year have already helped the brand's U.S. dealers.
"We have traditionally worked on a quarterly model with objectives that are set in October of the previous year, and that really didn't give us the ability to react as a brand to market conditions that were occurring — whether that be inventory, not enough of it on certain brand models or too much of it on certain models," Newell said. "We also had a quarterly sales bonus that created some undesirable behavior, in my opinion and the dealer council's opinion.
"So for 2020, the objectives are now set on a monthly basis; we're switching our business from quarterly to monthly, and the objectives are given to us at the beginning of each month. That allows us to look at what [our] inventory looks like today, for the next 30 days, and give us achievable targets without putting too much stress on catching up at the end of a quarter."
Newell also said Audi dealers learned several valuable lessons from the 2019 rollout of the e-tron electric crossover about what it will take to sell battery-electric vehicles in the U.S. Audi has several more BEVs planned for its U.S. dealerships over the next several years.
"I think that we have learned that range is extremely important when customers are considering [BEVs] and that as technology rapidly advances, the ability to increase our range on our vehicles in a timely manner is going to be critical," Newell said. "I think Audi would probably agree with me.
"For our current offering, the build quality is fantastic, and its drive quality is amazing. The only thing that we're getting pushback from customers on is the range."