We walk into a casino every month when we get our stair-step objective. That is exactly what it is. The OEM sets a target you did not negotiate. The target changes based on factors you do not control. If you hit it you get paid. If you miss by one unit you get nothing or significantly less. The margin between hitting and missing can be fifty thousand dollars or more depending on your volume tier. So you spend the last week of every month in a panic, cutting deals you should not cut, taking trades you should not take, and stretching terms you should not stretch, all to hit an arbitrary number that some regional manager put in a spreadsheet. Then the OEM adjusts the target next month and you do it again. This is not a partnership. It is a system designed to transfer risk from the manufacturer to the dealer while keeping the manufacturer's margin intact. I have been in this business for eighteen years and nobody has ever been able to explain to me why this is the right way to run a distribution network.
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Horrible for the brand. …
Horrible for the brand. Stair steps killed Nissan 30 years ago.
That misses what is actually…
That misses what is actually happening. Stair steps are not a relic and they did not kill Nissan alone. They are still structurally embedded in how most domestic brands run their distribution today, and the dealers defending the relationship publicly are almost always the ones in the top tier who benefit from the math. The dealers getting hurt by this are mid-volume stores where missing the threshold by two or three units in a slow month is the difference between a profitable quarter and a break-even one. That dynamic does not get discussed because those dealers are not the ones sitting on OEM dealer councils.
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