German automobile manufacturer Volkswagen has increased dealers’ margins to around 10-11% on every vehicle sold from the current 3-4.5% to push sales of its products in a highly competitive market.
Dealers can avail the increased margin which is a kind of performance-linked bonus if they comply to parameters set by the company relating to sales, customer satisfaction and attrition rate. The German automobile major has not been performing well in the domestic market and the move is seen as an attempt to incentivise dealers.
Kamal Basu, head, marketing and sales, Volkswagen, said the decision to give bonus would translate into increased customer experience. “We have increased the potential for each dealership to earn higher. Dealers can now earn 10-11.5% from the current levels of 3 to 4%, but that is entirely linked to the performance,” said Basu.
Though performance in the domestic market has not been impressive, things started changing since January. In April, the company registered an 18% y-o-y increase in passenger car sales to 3,572 units on the back of new launches and improved performance from the dealers. “Dealerships are private entrepreneurs and when they see a scope to earn more, they start pitching the products aggressively. The overall standards have gone up because better performance is going to translate into more earnings for the dealers,” said Basu.
For Updates Check Company News; follow us on Facebook and Twitter