The 12 Month Trap - Why OEM Dealer Target Setting Needs a Longer Horizon
Every autumn, the same ritual plays out across the industry.
An OEM regional manager sits down with a dealer principal. They pull up last year's numbers, argue over market share assumptions, and land on a set of targets for the following twelve months. Machine units. Parts revenue. Service hours. Maybe a CSI score if you're lucky.
Then everyone shakes hands, files the spreadsheet, and comes back in eleven months to do it all again.
I've sat on both sides of that table. Inside an OEM setting the targets, and inside a dealer receiving them. And I've argued the same point for years: annual target setting, on its own, is short-term thinking dressed up as planning.
What's wrong with the annual model
A single year target forces both sides into a reactive posture. Because the horizon is so short:
Investment decisions (people, facilities, tooling) get justified against one year of numbers, not the trajectory the business is actually on.
Dealers under invest in capability building, this being training, aftermarket infrastructure, digital tools, because the payback often lands outside the window being measured.
OEMs and dealers renegotiate the same assumptions every year instead of building on a shared view of where the business is heading.
Tactical firefighting (a soft quarter, a competitor promotion, a supply hiccup) gets treated as a strategic signal, because there's no longer term baseline to measure it against.
It's the equivalent of running a business on next quarter's numbers alone. Nobody would accept that at board level. Yet it's exactly how most OEM dealer commercial relationships are still run.
The alternative: a 3-year rolling framework
The model I've pushed for and used successfully, is simple in structure:
Year 1: Fixed. Hard targets, jointly agreed, resourced and committed to by both parties. This is the year you're actually accountable to.
Years 2 and 3: Roadmap. Directional targets built on realistic market and growth assumptions, not fingers in the air, but not locked in stone either. They exist to answer one question: if we keep doing what we're doing, where does this go?
Each year, the whole thing rolls forward. Year 2 becomes the new fixed Year 1. Years 3 and 4 get added and adjusted based on what's actually happened. The market shifts, the competitor moves, the dealer's own performance against plan.
Why this works better
The advantage isn't just "more planning." It's that strategy and tactics finally sit in the correct place.
Strategy gets room to be strong. A dealer expanding aftermarket capability, opening a new branch, or investing in a service technician pipeline needs more than 12 months to show return. A 3 year roadmap gives that investment a legitimate business case instead of asking it to justify itself against next year's unit target alone.
Tactics stay flexible where they should. Because Year 1 is fixed and Years 2-3 are directional, both sides can adjust the how. Pricing, promotions, channel focus, without blowing up the what. The roadmap absorbs market noise, it doesn't get rewritten by it.
It changes the conversation itself. Instead of an annual negotiation over who's being unrealistic, the discussion becomes. Has anything changed enough to shift the roadmap, or are we still on track? That's a fundamentally healthier relationship between OEM and dealer, closer to a joint business plan than a sales quota exercise.
It surfaces underperformance earlier and more fairly. If a dealer is consistently missing the roadmap years, not just the fixed year, that's a real signal, not noise from a single bad quarter. It gives both sides an evidence base for the harder conversations, rather than relitigating assumptions from scratch every autumn.
It gives new products and services somewhere to land. OEMs rarely stand still. New machine lines, telematics and connected fleet offerings, electrification, finance and rental products all arrive on their own timeline, usually outside the current annual cycle. A 3-year roadmap forces both sides to plan for that pipeline in advance. What training the dealer's technicians will need, what facility or tooling investment a new product line requires, what the aftermarket opportunity looks like once it lands. Handled inside a 12 month target, a new product launch is a disruption. Handled inside a 3-year roadmap, it's already accounted for.
The practical shift required
This isn't complicated to implement, but it does require discipline:
Build the 3-year model alongside the standard annual target setting process.It's additive, not a replacement for the Year 1 rigor.
Revisit Years 2 and 3 formally once a year, not just when things go wrong.
Base the roadmap years on the same data discipline as Year 1, market sizing, historic CAGR, normalised trends, not optimism.
Use the roadmap explicitly to justify longer payback investment decisions on both sides.
I've seen this shift the tone of dealer development conversations from adversarial to collaborative, simply because both parties are finally looking at the same horizon.
The bigger point
None of this is planning for planning's sake. A longer term strategic plan, built and owned jointly, produces a materially stronger relationship between OEM and dealer than a rolling set of annual negotiations ever will. When both sides are working from the same 3-year view, including where new products and services fit, decisions stop being made in isolation and start reinforcing each other. Investment, training, stocking, marketing, all pointing the same direction over the same timeframe.
That alignment is what actually moves the numbers that matter. Not just hitting this year's unit target, but sustained improvement in profitability and market share over the period that counts, because both parties are building toward the same outcome instead of resetting their assumptions every twelve months.
The question worth asking at your next planning cycle isn't "what's the number for next year?" It's "where is this business going over the next three, and does next year's number actually get us there?"
I work with OEMs and dealer principals on exactly this kind of commercial planning framework. If your target-setting process still resets to zero every twelve months, I'd be glad to talk through what a rolling model could look like for your network.