Chrysler to ease dealer quotas

Unpopular sales targets will be lowered, not halted

Bradford Wernle | | Automotive News / December 25, 2006 - 1:00 am DETROIT -- The Chrysler group will lower its monthly sales quotas for dealers in 2007 but will not do away with the unpopular incentive program.

Chrysler spokeswoman Lori McTavish confirmed last week that the automaker will ease its controversial "volume-based performance award," or VPA.

"Overall, the average dealer (sales quota) will be lower in 2007," McTavish said on Thursday, Dec. 21.

Chrysler offers dealers up to $700 in cash per vehicle if they hit a monthly sales target set by the company.

But unlike other automakers' "stair-step" sales incentives, Chrysler's program is almost an all-or-nothing incentive with few intermediate awards. That makes it risky for dealers to chase sales targets because they often trim their margins to boost sales.

Dealers have complained that the sales targets are unrealistic and force them into price wars with other Chrysler group dealers.

A dealer who asked not to be identified said the current monthly sales goals aren't based on market demand but "on the amount of cars Chrysler has jammed down the regional business center's throat."

In recent weeks, Chrysler has taken steps to mollify dealers who are upset about the company's aggressive efforts to boost sales. The chief target of their ire - global sales chief Joe Eberhardt - resigned Dec. 5.

Meanwhile, Chrysler group CEO Tom LaSorda has been meeting with dealers in an effort to ease tensions.