Auto Manufacturers Raise Consumer Incentives as Dealer Deals Drop

Consumers shopping for automobiles last month found that manufacturers are offering a better deal than dealers themselves.

A recent report by Autodata Corp., that studies dealer incentives, among other factors, found that dealer incentives by sellers of domestic vehicles dropped 5.8% in March to $4,033 per vehicle compared to the previous month.

As for the Big Three manufacturers—Ford, General Motors and Chrylser—online automotive resource Edmunds.com said that consumer incentives averaged $3,472 per vehicle in March, up $311 from February.

Santa Monica, CA-based Edmonds.com reported that GM raised its consumer incentives in March by $312 to $3,732 per vehicle sold.

Autodata Corp. of Woodcliff Lake, NJ, reported in its U.S. Marketing Promotions Cost Analysis that GM dealers weren’t as generous, spending $4,181 on incentives in March, down $85 from the previous month.

Manufacturers are also offering lots of consumer promotions.

For example, GM’s Hot Button promotion, which kicked off Monday, gives consumers a $1,000 manufacturer incentive to purchase a new vehicle. And its December Red Tag Sale had incentives for consumers, but also allowed dealers to slash prices further if certain models needed to be pushed off its lots.

Autodata’s report includes consumer rebates, discount financing, lease rate subvention, residual exposure, dealer allowances, volume bonus payments and contests. Also, for the report, GM’s figures exclude its Saab brand.

Edmonds.com’s monthly True Cost of Incentives report takes into account all of the manufacturers’ various U.S. incentives programs, including subvented interest rates and lease programs as well as cash rebates to consumers and dealers.

Dealers tend to lower incentives as new models come to showrooms. GM, for example, has introduced such new vehicles recently as the Pontiac G6 and the Chevy Cobalt, and is launching 10 new vehicles in the next 20 months. However, dealers tend to raise incentives each month through July as the end of the model year approaches, and cars need to be cleared off lots.