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Audi unloads '02s
Presto-chango! Spiffs of up to $4,000 change new cars to old

By Arlena Sawyers
Automotive News / March 23, 2003




The Audi program

Runs through April

About 700 untitled new 2002 cars and 300 to 400 service loaner cars available

Half of vehicles are Audi TTs

Dealer incentives of nearly $4,000 per vehicle

Consumer rates as low as 1.9%

In an effort to clear dealer lots of unsold new 2002 models, Audi of America is encouraging its dealers to put the cars in their certified pre-owned inventory and sell them as used vehicles.

On March 1, Audi had a 100-day supply of new vehicles, up from an 85-day supply on Feb 1.

About 1,000 to 1,100 cars are available under the program - 700 new 2002 cars in dealer inventory and 300 to 400 retired loaner cars.

Russ Hill, Audi national sales director, says about half of the vehicles are Audi TT sports cars, which had sales of 1,225 through February 2003 vs. 1,351 through the year-ago period.

The company is paying dealer incentives of up to nearly $4,000 for each 2002 untitled car and retired service department loaner car sold under Audi's Certified Pre-Owned Executive car program. Audi had been offering $1,000 dealer incentives on some of its 2002 models.

Hill says the program's purpose is to give dealers an innovative way to clear out their 2002 models, snag more certified used-vehicle sales and help dealers price the 2002 vehicles below their new 2003 counterparts.

"A 2002 has a year's depreciation, and it's not even sold," Hill says. "Unless you want to distress-merchandise it, you have to come up with a way to make both (the 2002 and 2003) attractive."

Audi reports the cars as new retail sales once they are taken out of a dealer's new-car fleet for certification.

The cars are covered by the company's standard four-year/50,000 mile new-car warranty plus the limited certified used-car warranty that extends the coverage to six years/100,000 miles.

Money makes it work

Incentives can total $3,950:

Hill says the company usually charges dealers about $900 per vehicle to cover the certified warranty. Under the program, that cost has been cut in half, saving $450.

The company also is offering an incentive of up to $2,500 per vehicle, depending on the model.

Dealers whose customers finance the vehicles through Audi Financial Services earn an additional $1,000.

The captive finance company is offering special finance rates as low as 1.9 percent to consumers who purchase the vehicles.

If the program, which runs through April, is successful, Hill says it is likely the company will use it every year to clear out carryover inventory. "Our (certified sales) growth is up about 35 percent over (the same period) last year," Hill says.

"We wanted to find out what are the advantages and to catch that growth wave. It's a wonderful time to test the concept to see if we want to do it in the future."

Wayne Williams, owner of Williams Auto World (Volkswagen-Audi-Subaru) in Lansing, Mich., says he had one 2002 model in his inventory, a TT convertible.

After learning about the program, he placed the vehicle in his service loaner fleet.

A customer who drove the vehicle as a loaner shortly afterward purchased it as certified used vehicle.

Williams says the program enables dealers to make a gross profit of $1,500 to $2,000 on a TT compared to the $2,000 to $2,500 a dealer would normally make on the sale of a new car.

Complicated program

He says he can live with that because Audi is doing what it can to help dealers merchandise a year-old car.

His only complaint, he says, is that the program has too many components and is complicated.

"Most Audi dealers are multiple line dealers, and it's hard to keep track of all of these programs," says Williams, who expects to retail 50 to 60 certified used and 140 to 150 new Audi cars this year.

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