Staying Focused on Incentives
Incorrectly or Underutilizing Incentives Can Be Detrimental to your Dealership
Many dealers are too busy selling to adequately stop and review a year’s worth of new car deals. Even large dealerships with an in-house employee dedicated to incentive reviews can miss potential opportunities. That’s money that goes unclaimed every year, affecting your customers, market share and dealership.
The Financial Impact on Your Dealership
Factory incentive programs favor bigger dealership groups that have the manpower, capital, and inventory to meet targets. They can also influence other dealers’ behavior. For example, if one dealer discounts new-car prices to hit a sales target, his competitors must follow or lose sales.
Since factory-to-dealer incentives are paid directly to the dealer once the vehicle is sold, if your sales team is overlooking available incentives, they are also missing gross profits on vehicles sold and lost sales.
It is estimated that for each sale completed without an available incentive, a dealership loses 4-5 buyers who received all the vehicle incentives at another local dealer.
“The average first-time incentive review process shows that about 2-3 percent of all sales have a missed rebate,” Terry Dismore, a Brady Ware Dealership consultant, said. For example, he added, “Effective April 4, 2022, Ford announced a new, 120-day limit on claiming rebates, resulting in dealers that will permanently miss incentives as of August 4, 2022. In addition, Ford declared numerous Dealer Cash rebates that that many dealers are currently missing out on.”
Today, incentive programs reach beyond new-car sales. In some cases, auto-maker incentives supplement sales staffs’ pay. The growth in targeted rewards also increases manufacturers’ power to shape dealership operations.
Claiming Lost Incentives
Among our clients, we find that for every 100 deals reviewed, the average dealer can claim 2-3 lost incentives. Here are some things you can do:
- Put an experienced person in charge of managing incentives.
- Have a backup plan in case the incentives manager leaves.
- Convince the controller or office manager to get involved by reviewing balances and reconciling incentives each month.
