Amid surging sales in the United States, automakers are following the lead of smaller import brands and are now offering stair-step incentives to their dealers. Volkswagen, Mitsubishi, Suzuki and Kia have been using the stair-step system in order to encourage dealers to reach sales target. With the success of smaller import brands in implementing the program, carmakers like General Motors, Chrysler, Nissan and Honda also started employing the system this year.
GM’s stair-step system commenced April 25, 2012 while Honda started almost two months earlier on March 1, 2012. Kia dealers said that the stair-steps system, which offers dealers high incentives for hitting sales targets, is one of the main reasons behind the company’s rapid expansion in the U.S.
According to the dealers, while other brands use the system for specific vehicles, Kia’s program pays dealers per-car cash bonuses for achieving dealership sales objectives, regardless of the models sold. A Kia dealer revealed that he earns an extra $800 on every Kia car he sells every month, thanks to the program.
According to the dealer, he earns half of the amount by reaching the target and the other half by topping it. Tom Loveless, vice president of sales for Kia Motors America, remarked that there is a real benefit for a dealer knowing every month what the company expects.
Volkswagen, meanwhile, uses the system dubbed as Volume Based Performance plan, wherein dealers earn extra cash for hitting a percentage of a sales target. Under the plan, a dealer earns a percentage of the sticker price of each car sold in a month, and the percentage increases depending on the dealership’s target performance.