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VW drops volume bonus for standards incentives

Volkswagen’s move away from volume bonuses could mark a new direction in car retailing.

The company has abandoned traditional incentives, preferring instead to encourage maintaining and increasing brand representation standards.

Rawdon Glover, head of retail operations, says Volkswagen Passenger Cars no longer operates a volume-based scheme.

“One new element we introduced for 2005 is a focus on sales process. Initial results show a positive improvement in this area and as such this has been welcomed by our network,” he says. “There are currently no plans to reintroduce volume-based schemes.”

John Cook, managing director of Heritage of Salisbury VW, is chairman of the Volkswagen Business Development Group, which worked with Volkswagen UK last autumn to review the new vehicle margin structure. The brief was to accurately align it to the needs of the brand, its retailer network and its customers.

“Initial feedback from the network is extremely positive, with the structure appearing to focus retailers’ attention precisely where it is required to support sustainable business growth,” says Cook.

The model was adopted at the beginning of the year and has been met positively by dealers. Ross Johnson, sales executive at Cooks VW, Peterborough, says: “We were told how the new system would work in September/October of last year.

“The smarter dealerships planned well ahead and, like us, have had no problems. Showroom sales now make up 5% of our potential 14% bonus.

“The remaining 9% is made up from a combination of scores from areas such as mystery shopper and e-Good Manners, our electronic diary system. Overall, we’ve got no complaints.”

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