Audi dealers and the brand accomplished something pretty remarkable in 2022: They found the balance point when market share, inventory, sales and incentives achieved equilibrium, allowing the automaker and its dealers to maximize profitability, the chairman of the Audi National Dealer Council says.
Don Flow, CEO of Flow Automotive Cos., a dealership group headquartered in Winston-Salem, N.C., which has 44 new-car franchises, including four Audi stores, is starting his third consecutive year leading the council. He said the German premium brand discovered its optimal balance point in part through a new collaborative and respectful working relationship with its dealers that sought to enhance mutual understanding and mutual benefit. And it worked.
“We did get a clearer picture of what an ideal situation actually looks like for Audi dealers, what level of turn maximizes profitability for the entire system along the way, where customers still have a great experience,” Flow said.
“It turns out, we don’t need 69 days’ supply. Yeah, we really don’t — the actual number is probably 20. More than we have now, yes. But in the premium segment, if you produce the right cars, we’ve learned that somewhere between 20 to 30 days’ supply of cars is all we actually need to maintain market share.”
Flow said that historically reduced inventory level produced “maximum market share and the dealer had their maximum profitability as well.”
He credited brand executives in Germany and Herndon, Va., with helping to reset factory-dealer relations, calling the transformation a “remarkable change” that’s led to a “collaborative approach” to joint problem-solving that will pay dividends.