Hyundai’s “temporary” program has raised concerns among dealers
Responding to dealer concerns, the Canadian Automobile Dealers Association (CADA) put Hyundai Auto Canada Corp. on notice that they expect the OEM to shelve a “temporary” program that makes dealers pay a dealer program fee for every new vehicle sold under any Hyundai incentive program.
Hyundai issued a letter to its dealers in July explaining that the “temporary” program would run from August 1, 2013 to January 2, 2014.
“CADA expects this to be just that, a temporary program,” says Rick Gauthier, CADA President and CEO in an exclusive interview with Canadian auto dealer. “The dealers aren’t happy, but at this time the dealers are willing to take you at your word that it’s temporary and a one-time program.”
The amount of the program fee varies by nameplate, but averages about $220 per vehicle, according to CADA. The association is concerned that this could be the start of a trend that further eats into already narrow dealer margins on new vehicle sales.
“When we looked into this we realized it was a program that was designed, or promoted as being a voluntary program, when in effect a dealer doesn’t have any choice,” says Gauthier. “The concern for us is that we don’t want this to be the beginning of a whole new approach by any vehicle manufacturer to start subsidizing its marketing efforts and dealer support by having the dealers pay for it.”
Gauthier said the competition for all dealers across the industry is fierce, and OEMs have to find ways to compete without expecting dealers to carry the freight.
Gauthier says the association wrote a letter to Steve Kelleher, Hyundai Auto Canada’s President and CEO putting the automaker on notice that CADA expects it to live up to its commitment to end the program and not start another one.
In the letter, Gauthier writes: “You should know that it’s not CADA’s practice to involve itself in the vast majority of issues arising between a manufacturer and its dealers, however from time to time expressions of discontent by our dealer members regarding their manufacturer’s action compel us to take notice of the concerns and articulate it to their manufacturer and that’s what we are doing in this instance.”
The letter also states: “We hope that the temporary nature of the program is an inherent recognition by Hyundai Auto Canada that this is designed to be an extraordinary circumstance rather than evidence of the going forward relationship between Hyundai Auto Canada and its dealers.”
