For a car dealership, the bottom line is, well, the bottom line. They’re in business to make a profit, and let’s face it – they don’t always have the best reputation for providing full disclosure about how their businesses really work. Fortunately, buyers today have access to more information than ever before about how dealership incentives work, which can help them get better deals. But here’s a key point to remember – whether the incentive is being paid to the dealership or to the end consumer, it comes out of the same pocket. That pocket belongs to the manufacturer.
There are a number of consumer incentives that come from the manufacturers and pass through the dealerships. These include offers of low APRs on financing, cash rebates and low lease payments. These are good selling points and are usually widely advertised. They’re most likely to be offered on cars that aren’t selling well, either in a particular region or on a nationwide basis. If a car is new, expensive or in demand, don’t expect to see these kinds of incentives, because – quite frankly – those types of cars tend to sell just fine without them. Think about it – when was the last time you saw Porsche or Lamborghini offering a cash incentive to boost sales?
It’s the other kind of incentive – manufacturer to dealership incentives – that you don’t see advertised. However, a little sleuthing on the Internet can turn up information on these types of incentives – the Edmunds.com website is a popular choice. Additionally, you may want to search dealer forum websites for the specific brand of vehicle you’re thinking about purchasing. Dealerships don’t talk about these kinds of incentives because they can add up to substantial income for them, as much as $100,000 a quarter or more.
Incentives can be based on reaching a certain level of sales or on customer service surveys. This means that if a dealership is short on its sales goals, they’re more likely to accept less profit on your particular sale so that they can get the bigger payback through the manufacturer. Sales quotas are often tallied at the end of the month, which is why buying late in the month is more likely to get you a better deal. This is another reason that two different dealerships can offer you two different prices on the same car –it always pays to comparison shop!
How many cars a dealership sells in a specified time period also determines how many cars the dealership will receive during a future time period. Consequently, more sales now means more opportunities for sales in the future. This is especially important, as most people are wary of buying cars from a dealership that has a mostly empty lot. However, use this newfound knowledge to your advantage. Request price quotes from multiple dealers – including those with quieter lots – to find a dealer who’s motivated to make the sale at a better price. You may be lucky enough to find a dealership that’s low on its quotas and desperate to make the sale to you.
