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Dealer Incentives
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Dealer Incentives

Bonuses offered by manufacturers to dealerships to increase the sales of specific models or to reduce excess inventories. Dealers may elect to pass on the some or all of these amounts to buyers. 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. However, buyers should do their own calculations, as each deal is different.

More On Dealer Incentives

Bonuses offered by manufacturers to dealerships to increase the sales of specific models or to reduce excess inventories. Dealers may elect to pass on the some or all of these amounts to buyers. 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. However, buyers should do their own calculations, as each deal is different.

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.  They are simply incentives that the factory offers the dealer, which the dealer can choose to pass on to its buyers, hopefully enabling it to sell more cars.

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 the buyer.  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.