Many automaker brands (not all) and their franchise dealer networks have been stuck in a tug-of-war over stair step programs for years.
But dealers like Andy Wright, managing partner at VINART Automotive Group, are saying something has to change, and he is ready for manufacturers (OEMs) to come back to the table and meaningfully collaborate with retailers.
For context: Stair-step programs are OEM-to-dealer bonus systems where automakers provide tiered monetary rewards (rebates/kickbacks) to dealers for hitting a variety of sales volume targets over a period of time.
Stair-steps almost completely disappeared during COVID when supply was constrained. But over the past couple of years, they have steadily returned as inventory continues to build.
"It starts with production discipline, right?" Wright proclaimed on Daily Dealer Live. "And you have to find the right balance between your production discipline and your ability to turn your inventory."
Case in point: Toyota, Honda, and Subaru are notorious for tighter inventories and minimal stair-step reliance.
And their relatively consistent pricing protects residual values, which can justify higher transaction prices without the need to push volume with incentives.
"You find one Toyota dealer that's turned down one singular car and tell them to call me and I'll take them… [Toyota is] just smarter and they treat their dealers with respect, with decency. Just an incredible manufacturer, somebody we're proud to be a partner with," Marcello Sciarrino, co-owner of Island Auto Group mentioned on a recent CDG Podcast.
But on the whole: "There's a pretty good argument that's being made out there consistently that [stair-step programs] lead to two-tier pricing,” Wright told hosts Sam D’Arc and Uli de’ Martino. “I don't think that's the type of experience that anybody really wants to give a consumer.”
Translation: Stores chasing stair-steps typically set their prices relative to their volume objectives at any given moment, which sometimes creates wild pricing fluctuations across dealerships in the same markets.
Between the lines: The cycle often reinforces itself. Many dealers discount heavily to hit volume targets. OEMs see the movement and read it as demand. Production stays elevated. Oversupply grows. More stair-steps get deployed… you get the picture.
But according to Wright, these forces are “destructive” toward the brands, customer trust, and dealership profitability.
"There are other ways that we can pull the incentive levers and turn the incentive dials that don't amount to a condition that is conducive to an absolute bloodbath out there amongst the dealer body," he explained.
OUTSMART THE CAR MARKET IN 5 MINUTES A WEEK
Get insights trusted by 55,000+ car dealers. Free, fast, and built for automotive leaders.
What Wright's calling for: Deeper conversations between dealer councils and OEM sales and marketing committees.
"There's got to be a mutual understanding for what each party's goals are," he said. "And then we have to come to a conclusion, or to an agreement rather, as to the best way to accomplish our mutual goals and our individual goals."
But those conversations don’t always happen at the level of detail they need to.
"I'm sympathetic to what the OEMs are trying to accomplish," Wright acknowledged. "But it shouldn't be at the absolute destruction-of-the-marketplace level and at compromising the customer."
Why it matters: Many dealers like Wright argue that OEM stair-step programs train customers to distrust pricing, crush front-end grosses, and permanently reset what the market thinks a brand is worth. And while volume-chasing stores can often keep their heads above water, the entire network has to live with thinner, more volatile profits.
Especially as dealers like Mike Rezi of Mike Rezi Nissan and Josh Clinton of Cape Coral Chrysler Dodge Jeep Ram, point out that some OEM incentive targets are simply unachievable.
Looking ahead: Wright makes it clear, he doesn’t want adversarial relations with the OEMs. Instead, he’s "calling for a heightened level of collaboration so that we can achieve our mutual success and our mutual goals together. Because we can do that without having to resort to some of these more destructive policies."
A quick word from our partner
Planning growth in 2026?
Join leading dealers and industry executives at the Haig Partners Maximizing Value Conference™ during NADA 2026 in Las Vegas. This year’s theme, What to Buy and How to Grow, delivers timely insights on dealership acquisitions, market conditions, OEM perspectives, and strategies for sustainable growth.
