Re: A4 pricing

[LToy@aol.com]

>guides).  I'd bet that Audi has started playing the "dealer holdback"
>game, where Audi rebates n% of sales back to the dealer on a monthly
>basis.

This dealer holdback scheme is only part of the game that manufacturers play
to "raise" the invoice price on cars.  Don't forget advertising allowances,
"published" dealer and consumer incentives, and others...

There are a few manufacturers out there with amazing dealer incentive
programs.  Can't mention names--my company has built a few of these systems
for a couple manufacturers and this stuff is considered a competitive
advantage by the marketing folks.  As you'll see, these programs are NOT
published, and for good reason (to the manufacturers, not us consumers)

Basically, these systems are like mileage plans for frequent flyers.  The
simple "override" is volume based and graduated--sell 10 cars, get a 2% back
on each one, sell another 5, get another 1% on those 5 for a total of 2% on
the first 10, 3% on the next 5 and so on.  The real sophistocated incentive
programs cut the market along n dimensions--geography, car model, car color,
time of day or day of month, etc.

Say the Widget manufacturer identifies a real dog in its lineup--4 door
yellow sedans.  Mr/s Sales person:  you'll get a $500 bonus for every yellow
4d you sell this month from the factory, above and beyond your dealer paid
commission.  Mr/s Dealer:  if you sell 50 of these in the next 2 weeks,
you'll get an extra $500/car incentive, if you hit 75 in 2 weeks, you get
another $250 for each car #51 - 75, and (here's a real kicker) if you hit 100
in 2 weeks, you'll get the the extra $250 for ALL cars sold for those 2
weeks.  So, the dealer incentive looks like so:
  49 cars;  0
  50 cars:  25000 = 500/car
  74 cars:  37000 = 500/car
  75 cars:  25000 + 18750 = 43750 = 583/car
  99 cars:  25000 + 36750 = 61750 = 623/car
  100 cars:  75000 = 750/car
Notice how selling that 100th car netted the dealer 13,250 more--just selling
one lousy car. In some cases, a dealer might make more money giving away that
last car and start looking for the n-th customer.

What makes this all work is knowing what cars are sold, their attributes, and
getting this info to the dealer so they'll know if they're working on that
99th or 100th car.  I kid you not--the example above is very real for a major
manufacturer here.  (name & numbers changed, but you get the idea).  In fact,
sometimes, they'll run a program for say, Tuesday nights and only in Texas.

fun stuff.  if only i knew all the little inside details.

linus.