Owning a vehicle dealership in a town or major city can be a risky business as well as one that is very competitive. If you don't have the right "brand" of vehicles and can't sell as many cars as your competition down the street, your business is probably on life support unless you, personally, have the "deep pockets" to stay alive for however long it takes to make a 360 turnaround!
One thing in your favor though, is that most all dealerships receive various incentives and rebates from the manufacturer in attempts to increase "foot traffic" into the showrooms and on the lot in order to create "buying" interest to all the potential "lookie Lou" buyers and "tire kickers." Often times that is the real key and selling "tact" in selling any type of vehicle and passing on the opportunity for those with a limited budget or who are "first-time" buyers to pick a car of their choice and drive off the lot.
So what are customer incentives? Well it's nothing real complicated to understand; they involve cash-back rebates, low-interest financing, and other dealer perks aimed directly at car buyers. On the other hand, dealer incentives come from the factory direct to the dealers negating the actual value of the any vehicle that is delivered from the factory. The car manufacturer targets these incentives on a regional basis mostly intended to generate sales on specific models that have recently hit a block wall in terms of sales production.
If you're in the automobile business you'll recognize the jargon used for these incentives: "spiffs," and are mostly targeted toward various dealerships in competition with each other as an incentive to move stock that is slow-moving. However keep in mind that dealers are under NO obligation to pass any rebates along to customers. Even though these "rebates" per se are rightfully the customers, you'll need to put on your negotiating cap if you want to partake in any of its grandiose.
By the same token, dealer incentives can be beneficial to you, the customer. One way is if the dealer is hustling to meet a factory suggested car sales quota, they may be more inclined to cut you a nice, fat, slice of the sales pie in order to reach the set goal. That said one thing buyers need to reserve in their mind is the fact that dealers are paying to keep that lot full of unsold inventory stock. Ergo, even if there is NO incentive attached to a particular model car you have fallen in love with, dealers are more likely to be quite flexible in pricing that car; especially if it has been sitting in the back lot for two or three months gathering nothing but dust. The mantra remains that the longer a car sits and collects dust, the more affordable it becomes to a savvy buyer who knows how the car sales game is played.
Basically in a nutshell, new car dealer incentives are nothing more than pressure attempts by manufacturers and dealerships to attract buyers. Hoping that with a slight nudge or push the will induce you to purchase a new vehicle. Here are several ways incentives will make their appearance:
** Generous cash rebates
** Low annual percentage rates (APR)
** Dealership payback plans that mostly will feature low payment plans or long-term loan agreements that can include vehicle leasing.
If you're in the new car buying mood the best thing you can do is to educate yourself on what incentives are available on a particular vehicle prior to visiting a local dealership. Nothing works better in dealing with new car salespersons than a wheelbarrow full of knowledge, plus keen insight on how much room you may or may not have in terms of negotiating. Remember that nobody likes a bully so keep it simple, be persistent but polite, and don't believe everything you hear.
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