After three years as one of the fastest-growing car brands in the US, Volkswagen has hit a sales rut, and it can't get out. In response, Volkswagen Group of America downgraded VW's 2013 US vehicle sales target to 440,000, from the original target of about 486,000, reports Automotive News. The stair-step incentive program under which dealerships earn bonuses also was restructured early this month, yet VW USA remains committed to its goal of producing 800,000 cars annually by 2018.
Many VW dealerships rely on bonuses earned from an incentive program to make a profit, and the program was built around sales targets. But the reality of VW sales in 2013 had a number of dealers resorting to sales tactics that strained relationships with customers and other dealers in an attempt to meet the targets. This was reflected in a recent National Automobile Dealerships Association's survey that ranked VW's dealer policies last.
Volkswagen of America COO Mark McNabb has indicated that, through lowering US sales targets, simplifying bonus calculations and giving the incentive program clearer goals and more predictable monthly payments, VW is trying to ease the pressure on dealerships that rely on the bonuses, Automotive News reports.
Dealers are confident that sales will pick up when new models roll in, but VW dealership owner and chairman of the company's national dealership council, Jim Ellis, admits that right now VW is "getting kicked around a little bit here," reports Automotive News, by stronger-than-expected competition in the compact and midsize sedan segments.