What Is Dealer Incentive?

Dealer incentives are money provided to a dealership to help close car sales. Dealer incentives can help buyers save thousands of dollars when shopping for a vehicle. However, incentives should be deducted only after negotiating a price close to invoice.

Customer Rebates

Customer rebates are incentives passed from the manufacturer to the customer through the dealership. In place of rebates, low- or no-interest financing offers sometimes are a feature.

Dealer Cash

Dealer cash is money given to the dealership upon selling a vehicle. Dealer cash may be passed on to the customer to lower the selling price, or it may be held by the dealership to increase profit.

Holdback

Holdback is an amount paid by the manufacturer to a dealership to offset normal expenses of doing business, such as salaries and building maintenance.

Performance Bonuses

Manufacturers occasionally offer performance bonuses if dealerships sell enough vehicles in a given month or quarter. Buying at the end of a month can make it easier to save on a vehicle if it helps the dealership become eligible for a large bonus.

Expert Insight

Dealer incentives vary wildly. Import manufacturers de-emphasize customer rebates, choosing instead to pass incentives directly to the dealership. The only universally offered incentive is holdback, which can equal an amount between 3 and 5 percent of the dealership's cost on a vehicle.

References

• Car Buying Tips: Main page