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Old 02-16-2011, 10:24 AM   #1
steve_biegler
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Default Stair steps

http://www.autonews.com/article/2011...6/110219904/-1

About time someone said this. The only thing that I can't figure out is why dealers are being quiet about this at convention? Maybe they are concerned about the factory repercussions if they speak their minds.
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Old 02-16-2011, 12:52 PM   #2
jayhawk
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no one in the company we've been in contact with through four owners doesnt know our feelings about the damage two tier pricing wreaks throughout the entire wholesale and retail process. the only conclusion is that they truly dont care about their dealer body or our retail customers. standards, transparency, integrity, trust, and loyalty be damned,,, hypocrisy rules the sales program "house".
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Old 02-17-2011, 10:22 AM   #3
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I added my comments to the story in Automotive News.

As I've stated before, I'm not 100% opposed to stair-steps but I do think they cause serious problems if they're used too often or too long.

In Chrysler's case, dealers have had to contend with stair-steps for the past decade. The VPA, MPA and ICV programs (Instant Value Coupons) have all created a two-tier pricing environment which worked to drive down new car gross profits and foster an environment where the customer doesn't trust their dealer.

By contrast, I've heard mostly positive reports about KIA's Dealer Cash programs. Maybe KIA's found a way to make them work?
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Old 02-17-2011, 12:36 PM   #4
rd3311
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Stair steps work great for the large MSR dealers who can roll the product quickly
and in volume, otherwise it takes the smaller dealers out of the game pricewise.

A couple examples the 1986 Dodge Dakota stair step program that started $250 then went up to $1000 per unit sold after the bogey was hit. I remember the check fondly that came in Jan 07 for over $250k...those are pleasant memories.

Isuzu also had a similar program for their pickups, it was a copy of the Dakota program
as the money was the same per unit $250-500-750-1000 it moved a lot of product as
well.
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Old 02-17-2011, 01:56 PM   #5
jayhawk
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and because of these continuing programs, wer'e all looked at like wer'e 'joe isuzu'.
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Old 02-17-2011, 02:18 PM   #6
DealerEx
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Stair step programs allow the Business Centers to punish and reward their dealers as they see fit. They can claim that the objectives are established by a complicated formula that ensures equality, but once you've seen proof to the contrary, you can never trust them again. A few years back, the SWBC had a big program on Dodge fullsize trucks. When we received our objectives, Possum and I discussed them on the phone and both agreed they were reasonable...not a guaranteed thing, but we had a good chance to hit the top payout which was retroactive to unit 1...we were happy. A few days later, Possum's DM accidentally faxed a copy of the entire district's objectives listed by dealer. This district included some of the top volume metro stores as well as the small rural dealers. Surprize!! The big metro stores had the same objectives as we did in almost every case! In effect, these dealers were guaranteed to hit the top payout from day 1, enabling them to immediately start advertising an additional $1000 off on their prices....the rest of us wouldn't know until the last week or even last couple of days if we would hit it or not. When you've seen it in black and white like that, it's pretty hard to believe anything they tell you.
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Old 02-18-2011, 06:31 AM   #7
birch3x
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I've always thought that stair step programs are really just a legal way aroung anti-trust laws. We all pay the same for the vehicles, including shipping.
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Old 02-18-2011, 07:59 AM   #8
steve_biegler
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Quote:
Originally Posted by birch3x View Post
I've always thought that stair step programs are really just a legal way aroung anti-trust laws. We all pay the same for the vehicles, including shipping.
We have a BINGO!!!!!!!!!!!!!!!!!!!!!!!!
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Old 02-28-2011, 11:08 AM   #9
XDCX
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Default This week's editorial by Keith Crain in Automotive News

It's almost like Keith Crain's been reading the forum.

His editorial this week compliments AutoNation's Mike Jackson for his stance against stair step incentives and the resulting two tier pricing.

Crain's comments even go so far as to state stair steps often favor larger dealers at the expense of smaller dealers and they create an environment of consumer mistrust. He encourages the OEMs to curb this practice before the state Attorney Generals do it for them.

Here's a link to his editorial - click here
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Old 03-01-2011, 05:21 AM   #10
steve_biegler
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http://www.autonews.com/apps/pbcs.dl...302289993/1137

He needs to find a dealer to befriend....suprised that two tier pricing is still going on? Hell it never quit! As editor for the premier auto info mag he needs to get out of the office more.
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Old 03-02-2011, 10:22 AM   #11
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Quote:
Originally Posted by steve_biegler View Post
http://www.autonews.com/apps/pbcs.dl...302289993/1137

He needs to find a dealer to befriend....suprised that two tier pricing is still going on? Hell it never quit! As editor for the premier auto info mag he needs to get out of the office more.
That's the exact same link I used in my post.

That said, I do follow your point. While I think it's great that Keith Crain is using his editorial to focus attention on Jackson's statements, it's also concerning that he seems surprised two-tier pricing continues to exist.

I added a comment to Crain's editorial - I salute Mike Jackson for filling the void left by the NADA's absent leadership.
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