Hyundai, Kia Boost Discount, Dealer Profit Potential

Washington DC August 14, 2006; The AIADA newsletter reported that every time a redesigned product reaches dealer showrooms, Hyundai and Kia are increasing the dealer discount to help its dealers realize more profit potential per vehicle.

Previously, bonuses were tied to overall sales volume; so, the more a dealer sold, the better the bonus, which averaged from $100 to $900 per car.

While the new plan still credits overall volume, a new portion enters the fray based on the dealership's sales efficiency compared to the rest of the market area, reports Automotive News.

As part of the new discount to dealers, Hyundia's VP of Product Development and Strategic Planning John Krafcik says Hyundai dealers have received a discount boost of 0.6 percent on the 2007 redesigned Santa Fe and the new Tuscon – translating to an additional profit potential of $100 to $150.

Yet, dealers argue that Hyundai and Kia need to do more to increase the margins on their vehicles. "The margin between invoice and (sticker price) is theoretical profit, so it's not important in our business model," says Peter Lanzavecchia, AIADA Board member and dealer principal of Burns Hyundai in Marlton, N.J.

But "There needs to be at least some margin, so we can show customers some flexibility."

Lanzavecchia also said more profit remains to be earned by drawing customers back to the service drive.