Stellantis has paused its Marketing Covenant, the program that reworked pricing, website, and digital advertising rules across its U.S. dealer network, about six weeks after it took effect Oct. 1, the automaker confirmed to CDG News.
Driving the news: Dealers received the update Friday (Nov. 13), according to a memo reviewed by CDG News.
When asked for comment, the automaker sent the same statement that went out to its retailers (that one was signed “Stellantis Sales Operations”).
“The Marketing Covenant was introduced to strengthen dealer marketing investment and drive customer demand. While the objective remains unchanged, we recognize that the program's complexity has created challenges and that results have not consistently met our collective expectations. After reviewing dealer feedback and market performance, we have decided to pause the current program while we develop a simpler, more effective approach for the future. We appreciate the engagement and feedback from our dealer partners and remain committed to working together to strengthen local marketing and drive retail demand.”
Stellantis did not specify when a new program would launch or what happens to strikes or reimbursement rules already in place.
The backdrop: The pause comes a day after a leadership shakeup from the automaker.
On Nov. 12, Stellantis named Tim Kuniskis U.S. chief commercial officer, adding U.S. retail and fleet sales and the dealer network to his responsibilities, as the automaker looks to simplify its commercial operations.
The same day, the company said Michael Orange, senior vice president of U.S. sales and network performance, had left.
Matt Bowers, CEO of his namesake Matt Bowers Auto Group, which has three Stellantis stores in Louisiana, Texas, and Indiana, called Kuniskis “probably the best guy they have, you know, in the company.”
Quick rewind: The covenant, which CDG News covered ahead of its launch, combined three separate compliance programs into one framework.
According to Stellantis’ launch deck, it rested on four pillars: the Dealer/Market Accelerate Program, Certified Dealer Websites, Certified Digital Advertising, and Compliance & Audit Policy.
Stellantis pitched it as a push for consistency and transparency, so shoppers would see the same price from one dealer’s site to the next.
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Among the rules:
One pricing formula: Advertised prices had to start at MSRP, add dealer add-ons such as doc fees and accessories, and subtract a dealer discount and any every-person incentives.
Certified everything: Dealers needed certified websites with certified digital retailing and trade-in tools, and DAP co-op reimbursement for digital marketing flowed only through certified providers.
Paid search limits: Dealers couldn’t bid on other Stellantis dealers’ names.
Data sharing: Dealers had to sign a data-share agreement.
Strikes: Violations counted as strikes over a rolling six-month window. A third strike triggered a chargeback of the prior 90 days’ delivery allowance and DAP contribution. A fourth meant losing Tier 1 leads, inventory syndication and Dealer Locate placement.
At the time, some dealers welcomed it.
Phil Pecoraro, operating partner at Murdock CDJR in Salt Lake City, told Daily Dealer Live in August that he saw the covenant as long overdue, partly because of how it would treat online competition.
“It makes Carvana on a level playing field with all of us,” Pecoraro said.
What they’re saying: Bowers said the pause is a good move.
The timing of the covenant and its complexity “probably didn’t make it a tenable thing,” he said.
It also changed how he ran his business.
“If you were to buy an underperforming store … and had ground to make up in sales, you need to make that ground up quickly,” Bowers said. “It became difficult to do when you were limited creatively or pricing-wise, by the covenant, so it affected decisions I made regarding stores I looked at, and it affected the amount of cars I was willing to buy off of them and stock on the lots.”
Bowers said that, coincidentally or not, Stellantis’ wholesale numbers went down after the covenant was introduced. The program may be good long-term, he said, but in the short to medium term “it was not a good thing for the car manufacturer.”
Nick Chivinski, vice president of sales and strategy at SavvyDealer, which runs Google advertising and SEO for franchise dealers, said a simpler program could be good for both sides.
“Dealers pushed back on the complexity from day one,” Chivinski told CDG News. “If the next version is simpler and lets dealers judge partners on results, that’s a win for dealers and for Stellantis. For our stores, nothing changes.”
Bottom line: For now, the new rules aren’t written, but Stellantis said dealer feedback helped drive the pause.
The company also said it remains “committed to working together to strengthen local marketing and drive retail demand.”
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