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Are Auto Incentives Meant to Confuse?

 

Alan ChanAs the auto industry reaches record highs in sales, the competition among manufacturers and dealers is also at a record high. Each segment of the market is reaching for a greater share of the business, which leads to more marketing creativity among the manufacturers and more competition among dealers. This creates more complexity and creativity in their marketing and advertising messages, all of which are designed to drive the consumer to their brand or dealership. Sometimes, the intense competition leads to advertising and marketing that borderlines deception. I currently serve on the board of Ford’s Advertising Group that represents all Arizona and Las Vegas Ford dealers and often get a close up view of the advertising messages of our competition at the manufacturer’s level and the regional level. As a local dealer, I see the advertising messages presented to the local community. At the same time, I am also a consumer and always try to view our industry and my business with the eyes of the consumer. Here are a few things to consider.

So, you are in the market for a new vehicle and have heard all the high frequency, loud and intense marketing messages. The advertising message is presented so quickly that you are not sure it was in the English language; and print advertising is in a type size that requires reading glasses. When you finally believe you understand the offer, you are not certain you qualify. From a dealer’s point of view, there can be a long list of incentives for which you may be eligible, and a complete understanding is required of these programs from both the manufacturer and regional levels. While incentives can vary among manufacturers and regions, offerings may include the following:

Factory or Manufacturer Rebates

Bonus Cash Rebates from the manufacturer

Bonus Cash Rebates from the finance division of the manufacturer

Zero percent financing plus Bonus Cash Rebates

Incentives for customers owning competitive make brands

Incentives for owners owning certain models of the manufacturer’s brand

College student programs

First-time buyers programs

Preapproved offers through the manufacturer’s financing division

Deferred payment options through the manufacturer’s financing division

Incentives for customers leasing the manufacturer’s brand or a competitive brand

Private and direct mail offers from the manufacturer

Mobility discounts for the handicapped

Member discounts such as military, or memberships in other organizations

The list can be lengthy and in reality customers may not know what all is available to them. When the dealer presents the customer the purchase offer or lease offer, it can be confusing if benefits and features of each are not clearly explained. And finally, when a purchase is decided, the question is, is it better to take the bigger factory rebate, zero percent offer with or without a bonus cash rebate or the 1.9 percent offer with bonus cash rebate?

And what about the dealer discount? Are there items added to the manufacturer MSRP or sticker that are unnecessary dealer items that you wouldn’t purchase and are marked up so they can be marked down and presented as a dealer discount? And what about that trade value? Were any of the discounts used to inflate the true value of my trade?

From a consumer’s viewpoint, it can get very confusing and misleading. The manufacturer’s incentive programs can even be confusing from the dealer’s point of view. Most dealers want to offer the customer all the incentives available, since they are from the manufacturer or region and are not an additional cost to the dealer. However, all dealers may not present all the incentives available to the customer, perform the proper interview and ensure that the customer has not received a personal direct offer from the manufacturer that is an additional rebate or incentive.

So what’s a consumer to do? Find a dealer who is transparent in his or her offerings and willing to take the time to consult with you. Ask the dealer to print out the manufacturer’s incentives list for the exact vehicle you are thinking of purchasing. The information or offering is not always transparent or available to the public. Even with the available information, most consumers are not able to perform the financial calculations without proper consultation. Purchasing a vehicle is a major expense and requires trust and transparency from your dealer. FBN

 

By Alan Chan, Babbitt Ford

 

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