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Incentives are Subsidized by Vehicle Manufacturers
Today almost all manufacturers are offering low finance rates, lease payments or customer cash rebates. This week I will clarify the benefits of each of these offers to assist you in making a decision that is right for you.
It is important to know that all the incentives listed above are subsidized by the vehicle manufacturers. As New-Car Dealers we have no control over a manufacturer?s suggested retail price (MSRP), our cost price and these incentives.
There is no mystery behind vehicle pricing or incentives ? supply and demand are the driving forces in our industry.
Manufacturers? market share expectations and New-Car Dealers? inventory drive the level of incentives. As dealers our margins remain constant regardless of whether a manufacturer to consumer incentive is offered or not.
Market share, more than short-term profitability, is a primary motive when a manufacturer is determining incentive levels. Vehicle manufacturers must keep their plants producing. They are painfully aware that New-Car Dealers will continue to order vehicles only if the consumers continue to buy (them).
For various reasons, consumers will choose one incentive over another. For example, a consumer with cash in the bank earning a very low rate of interest may prefer to use their cash to pay for the vehicle and take advantage of the cash rebate option. While another consumer with investments yielding a higher rate of return might prefer the low lease or finance rate option. Remember that these incentives are alternative offers and cannot be combined. The manufacturers are simply attempting to address the different needs and wants of various consumers.
The option to lease is attractive, primarily due to lower monthly payments. It also allows you to pay taxes on your payment for the duration of your lease instead of paying them upfront. Leasing provides you with the added flexibility of changing your vehicle at the end of your lease term should your lifestyle change. The manufacturers? full disclosure lease provides the consumer with all the facts including the purchase price that their lease payment is based on, the interest rate and the actual cost of borrowing.
With the low interest financing option, consumers should calculate and compare the difference in the cost of borrowing between available bank rates and those offered through the manufacturer. Remember to compare this figure with the alternative cash rebate option. In order to take full advantage of the ?savings? associated with these discounted manufacturer finance rates you must allow the loan to mature.
Our trained dealership sales consultants can assist you with this calculation and comparison. Should you choose the financing option, subject to credit approval, you can finance taxes, freight, P.D.I., accessories, rust proofing and extended warranties at this very low rate.
Another bargain today are pre-owned vehicles, especially late models. Why? Because these manufacturer incentives on new vehicles impact used vehicle demand, and affect the value of these late model (2-3 years old) used vehicles. Prices on these vehicles drop when new vehicle incentives are strong.
Keep in mind that your trade-in is not exempt from these market conditions. Be aware of this when discussing the value of your trade-in with your New-Car Dealer.
Today?s new and late model vehicles are safer, more environmentally friendly, more fuel efficient, and are equipped with features and benefits that suit everyone?s needs and desires.
Visit any of our 300+ showrooms in the GTA and talk to our professional sales and lease consultants. We look forward to meeting you, reviewing the current incentives, demonstrating our products, and answering any questions you may have.
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