Dealer Incentives
(Definition)- Programs offered by manufacturers to increase the sales of slow-selling models or to reduce excess inventories. Dealers may elect to pass on the savings to the buyer. Often, the dealer gives the buyer a choice of a special dealer finance rate or a manufacturer's rebate. In many cases, the rebate will be a better deal.
More about Dealer Incentives
Dealer incentives are a way for car manufacturers to get rid of too much inventory. If the car is not sold, they cannot make money on it. Therefore, offering an incentive is sometimes the best way to help a car to move off the lot.
Dealer incentives come in two forms: factory-to-dealer and factory-to-consumer. Factory-to-dealer incentives usually are not disclosed to the consumer. It is simply an incentive that the factory offers the dealer, which the dealer can pass on to the consumer. The dealer also wants to sell the car, so the dealership tends to pass along these incentives, or at least part of them, to the buyer.
The other dealer incentive is factory-to-consumer. This is also known as a rebate. In this case, the incentive comes directly from the manufacturer and bypasses the dealer. It can offer great savings to the consumer.
If shopping for a car, an incentive can really help bring down the total cost. If it is a particular model that is not that popular, chances are the factory has offered the dealer some sort of incentive on it that can be passed on to you. If, however, it is a very popular model, there may not be any dealer incentives and therefore the price may be less negotiable. Incentives follow the economic law of supply and demand. If there is too much supply and not enough demand, the factory has to do something to increase demand for that car. Incentives are meant to do that.
