Volvo Cars of North America has dropped a new dealer discount program that paid dealers another 2 or 3 percentage points for enhancing their dealerships. According to acting chief executive Tony Nicolosi, the decision to drop the program was due to the fact that struggling dealers are in no position to improve their stores for the Volvo Retail Experience program.
Volvo’s sales in the country continue to drop. It also has no new offerings in the next two years.
According to Nicolosi, Volvo is working on a new facilities program to be revealed at the National Automobile Dealers Association convention in January 2014 in New Orleans. After dropping the new program, Volvo will go back to its previous fixed dealer discount of 14 percent on new vehicles.
Under the new variable dealer discount program that came into effect with the 2014 model year, dealers could have earned up to 17 percentage points on the S60 sedan and XC60 crossover; and up to 16 percentage points on other 2014 models.
The program was meant to be in effect for the next three model years. Dealers, however, lobbied Volvo to scrap the new program.
"Our brand and the dealer profitability is not in the position right now to be making these investments," Nicolosi remarked at the Los Angeles Auto Show.
"We can't be fighting the dealers now." According to Nicolosi, the average dealership has to invest between $1.2 million and $1.5 million to comply with the Volvo Retail Experience requirements. He said that some dealers did improve their stores this year, for that they will receive payment in compensation.