Volkswagen will scale back its industry-best 6-year/72,000-mile bumper- to-bumper warranty program to 4 years/50,000 miles, but throw in two years of factory-covered maintenance beginning with its 2020 model-year vehicles, Automotive News has learned.

And to help its profit-struggling dealers, the German automaker is starting a new Tier 3 advertising program that will pay dealers up to $200 per vehicle to better "develop their local markets." The program is set to begin in the first quarter of 2020.

Volkswagen informed its dealers of the changes late last week.

Both are direct efforts by the German brand's new North American leadership team to address lingering issues with two different but equally important constituencies: consumers and its long-suffering dealer network.

For consumers, the amended warranty and maintenance program is a way to take on lingering doubts about Volkswagen's cost of ownership, while the new marketing help is a way to address lagging dealer profitability, said Duncan Movassaghi, senior vice president of sales and marketing with the Volkswagen brand's North American region. The move comes after Volkswagen conducted an internal evaluation of the costs and benefits of its current warranty, and determined that a change in strategy was in order.

"We felt that a combination of a strong warranty with a service and maintenance package and the co-op program for our dealers, which is where we netted out, was the best way forward," Movassaghi said. While the two-year maintenance program may cost some dealers lost service contract sales, Movassaghi said dealers would make up the revenue because the included maintenance would be paid at full warranty rate.

Volkswagen started its 6-year/ 72,000-mile transferable bumper-to-bumper warranty program in 2017 as the brand was launching its Atlas crossover and trying to emerge from its diesel emissions crisis. At the time,

the warranty was viewed as a way to restore consumer confidence in the brand. However, despite heavy advertising, the boosted warranty offering never became a major "why buy" for Volkswagen customers, Movassaghi explained.

"It was a good package, but we felt that there was a better way to use the resource," Movassaghi said.

For example, most lease customers would never realize the full benefit of the additional warranty, blunting its effectiveness as a sales consideration.

Another concern: Customers arrived at the dealership but hadn't heard about the warranty. "More than half our Atlas customers became aware of it in the dealership," Movassaghi said.