Audi dealer chair sees progress on profitability

Audi's U.S. sales have grown for 100 consecutive months, a remarkable streak that would be envied by the dealers of any brand. Yet it's taken a concerted effort by a special committee of the Audi National Dealer Council and the factory to make progress on the profitability of the brand's approximately 300 U.S. dealers.

David Rosenberg, CEO of the 65-store Prime Motor Group in Massachusetts and chairman of the council, credits Audi for taking steps to tackle the issue of profitability head-on. He points to a change last year in Audi's service loaner program as an example and said he counts Audi as one of only three brands that he considers a true partner to its dealers.

"We were getting killed on the old loaner program," Rosenberg said. "Audi recognized that, and we now have an unbelievable program — it's the best in the industry."

Rosenberg said that under the new program, Audi discounts the cars its dealers buy for service loaners down to the factory's cost.

"Now when we take these cars, we own them for the right amount of money," he said. "We're not upside down on them. We actually make money selling these cars. Before, we were losing $3,000 or $4,000 on each one. Just in my stores alone it was about a $700,000 swing in net profit last year. It's a great program. It's pretty amazing."

Rosenberg also said that shorter product life cycles at Audi have helped drive sales growth. Citing the Q5 as an example, he said luxury buyers are interested in owning the most up-to-date technology, which gives them a motivation to revisit the dealership when a popular vehicle such as the Q5 is refreshed.

Later this year, Audi's U.S. dealers will begin selling a redesigned A8 flagship sedan that will have the industry's first Level 3 autonomous driving system. It will be able to pilot the vehicle at speeds under 35 mph on divided highways. Rosenberg said dealers will rely on a message of added safety to sell the upgraded A8.

"Safety is one of the most important product qualities that people consider when buying a vehicle, and you have to sell [the autonomous driving function] as a safety feature," Rosenberg said. "The body shop's going to be a little less busy, but that's OK."