What happens now that VPA is Dead?

[XDCX]

Chrysler's VPA program has been described as one of the greatest thorns in the Dealer/Factory relationship.

Well, it's officially 01-01-08 and the VPA program is dead. What are your predictions for the future? Higher grosses and a level playing field? Or has too much damage already been done?

What does the future hold? Let us know your opinion.

[XDCX]

I want to put this topic back in play in the hopes that I can generate some discussion with the Chrysler Dealers, GMs and Sales Managers.

Will the elimination of VPA change the way you sell cars?

Will you still take a zero gross car deal just to move a unit, or is now a time when you can try to build gross and get back to selling product instead of price?

[dalej]

I want to put this topic back in play in the hopes that I can generate some discussion with the Chrysler Dealers, GMs and Sales Managers.

Will the elimination of VPA change the way you sell cars?

Will you still take a zero gross car deal just to move a unit, or is now a time when you can try to build gross and get back to selling product instead of price?
We have taken a few deals away from Dave Smith the last 2 months but to do it we have had to go into the holdback.The deal is not great but at least WE decide if we want the deal vs before we couldn't even make the deal because of them willing to lose money on some deals just to make VPA. I think it will take some time before they raise their sights and increase gross.They want to be number 1 real bad and the public perseption is that they still sell for less than anyone else.

[XDCX]

We have taken a few deals away from Dave Smith the last 2 months but to do it we have had to go into the holdback.The deal is not great but at least WE decide if we want the deal vs before we couldn't even make the deal because of them willing to lose money on some deals just to make VPA. I think it will take some time before they raise their sights and increase gross.They want to be number 1 real bad and the public perseption is that they still sell for less than anyone else.

dalej - Welcome to the Forum. :)

You make an excellent point and I think that's the reason Chrysler Dealers grew to hate VPA. It seemed like there was always at least one dealer in the market that was just a "few deals away" from hitting VPA and would start doing zero gross or negative gross deals.

Concerning Smith, I agree that they'll push hard to retain their image as being the World's Largest Dodge Dealer. That said, I think that they'll have a tougher time now that VPA is gone. (See the Dave Smith thread for comments about how Smith benefitted from the VPA calculation)

Concerning vehicle gross profits, I'm not sure that they're ever coming back. I'm convinced that the Internet has "let the Genie out of the bottle" and she's not going back in. :(

Thanks again for the post - I hope you'll become a regular contributor.

[XDCX]

Concerning the post about Dave Smith Motors and how the elimination of VPA may affect their sales - click here for the topic. (http://www.dealershipforum.com/forums/showthread.php?t=222)

Essentially the argument is that VPA had MSR (Minimum Sales Responsibility)as part of its formula making the VPA objective easier to hit for dealers that had huge MSP percentages.

I wouldn't count Smith out - as stated above they are very competitive and do not want to lose their status as the top volume Dodge Dealer.

[SHACOS]

Chrysler still has a $400 program ($200 when you get the vehicle and $200 when you sell the vehicle making $400 in pure gross to recognize when you post the deal). Granted it's not as much as the $500 or $1,500 in some cases with VPA, but it doesn't hurt right?

[dodgeboy]

The loss of VPA will cost our stores plenty. In effect Chrysler has lowered our incentive payments by 20%. We have always made our target, at least on an annual basis. Will it change the way we sell cars? Probably not. If the customer is in your showroom will you let him walk on a zero gross deal? What really is zero gross? You get a shot at his trade in, and potential profit. You'll probably get some warranty dollars down the road. F&I gets to weigh in on the deal. He probably has a friend or two you may get to see in the coming weeks. If he walks you have SQUAT. Having said that, I will acknowledge that car dealers are the biggest bunch of, pardon my French, "whores" on the planet. Aided by our factory we will screw ourself and our neighboring dealer at the drop of a dollar. Well we ever overcome? Not in our lifetime. It's human nature. Deal with it.

[XDCX]

Chrysler still has a $400 program ($200 when you get the vehicle and $200 when you sell the vehicle making $400 in pure gross to recognize when you post the deal). Granted it's not as much as the $500 or $1,500 in some cases with VPA, but it doesn't hurt right?

The tough part with VPA is that almost all of the large volume metro stores "hit the wall" sooner or later and couldn't hit the objective. Then they found themselves at a $500 price disadvantage in their market.

As a point of clarification, VPA as I understood it was always a $500 incentive - you could hit the objective on a monthly basis, a quarterly basis or an annual basis but it never paid more than $500/unit. (e.g. If you missed your monthly number, you could still get paid if you hit the quarterly number - but you couldn't get paid for both the month and the quarter.)

VPA created two-tier pricing - the current program levels the field. :)

[XDCX]

The loss of VPA will cost our stores plenty. In effect Chrysler has lowered our incentive payments by 20%. We have always made our target, at least on an annual basis. Will it change the way we sell cars? Probably not. If the customer is in your showroom will you let him walk on a zero gross deal? What really is zero gross? You get a shot at his trade in, and potential profit. You'll probably get some warranty dollars down the road. F&I gets to weigh in on the deal. He probably has a friend or two you may get to see in the coming weeks. If he walks you have SQUAT. Having said that, I will acknowledge that car dealers are the biggest bunch of, pardon my French, "whores" on the planet. Aided by our factory we will screw ourself and our neighboring dealer at the drop of a dollar. Well we ever overcome? Not in our lifetime. It's human nature. Deal with it.

dodgeboy - Welcome to the Forum. :)

I'm impressed that you were always able to hit your VPA number. In my experience most of the dealers that I worked with left money on the table at one time or another. (Hence the hatred for the program.)

I agree about your comment about taking the skinny car deals - there's a lot to be said for moving a unit and building your customer base.

Thanks for your post, I appreciate your input.

[SHACOS]

When I talk about the $1,500 objective based programs, I'm talking about the truck or minivan objectives Chrysler had in the past. It is my understanding those will be or already have gone away.

[XDCX]

When I talk about the $1,500 objective based programs, I'm talking about the truck or minivan objectives Chrysler had in the past. It is my understanding those will be or already have gone away.

Sorry about that, I totally misunderstood. I thought you were adding the VPA Month + Quarter + Annual Wrap for a total of $1,500.

Concerning the objective based programs I know that there's an active incentive on the Dodge Ram Trucks. I'd be surprised if Chrysler, LLC ever dropped the objective based programs - I think they're hooked on them like crack. :)