“A, it erodes profitability, and B, it just makes managing our business difficult,” said Feldman, who sells Chevrolet, Buick, GMC, Hyundai, Kia, Genesis, Chrysler, Dodge, Jeep and Ram vehicles. “It eased up a lot or went away during the whole COVID situation, and we found out we could still turn cars and gross profits are decent.”
Feldman said stair-steps — long loathed by many dealers — also lead to perplexed and angry customers.
The programs “cause confusion with customers and dissatisfaction because different customers are paying different prices for cars,” Feldman said. “And so they go from one dealership to another. They don’t understand, ‘Why could I buy it for this number at ABC Motors, and I went to XYZ Motors and it was [a] completely different price for the same exact vehicle, same year, same equipment?”
The Alliance of Automobile Manufacturers, which represented a dozen automakers before merging with Global Automakers a year ago to form the Alliance for Automotive Innovation, has called stair-step programs a useful tool that rewards performance.
Feldman, whose New Hudson, Mich., group ranks No. 57 on Automotive News’ list of the top 150 dealership groups in the U.S. and who expects to sell more than 33,000 vehicles this year, said stair-steps come up daily at his dealerships.
“There’s no need for them. They harm customer satisfaction,” he said. “They make managing our business complicated. It’s just not healthy for the industry.”