The auto business embarked on a vector of "dynamic pricing" several years ago, lets not be so naive as to think that big data does not have a powerful influence on the decisions that are made on a monthly basis.
Financial services are also an intrinsic part of the incentive strategy.
We could keep on going with a myriad of stuff. We urge you to use our search feature to access out previous thoughts on "incentives" and "financial services".
With Ford in the US initiating a strong incentive campaign till the end of the year, suddenly incentives are on the forefront, with every pundit, analyst sharing thoughts and their opinions.
Let's bring it closer to Canada.
The moment most manufacturers relinquished leasing in Canada, and embarked on a longer than shorter term financing strategy. It was a brave new world, shifting the residual risk to CMS (Citizen Main Street), while CMS in the ensuing years has shifted the trade in deficiency to the manufacturer.
Transactions across Canada are closed on the basis of a monthly payment, the magical $500 per month is the average. To deal with the lower CDN dollar, deficiencies on trade ins, incentives are an intrinsic part of doing business. Yes...CMS is keenly aware on how to use incentives to uphold his mobility model.
The manufacturers that staid the course with leasing as well as financing have a substantial competitive advantage, which will become even more obvious in 2016.
The "incentive" that is rarely discussed are the various volume bonuses from the manufacturer to the dealer for reaching monthly agreed upon new vehicle sales objectives. If retail incentives to the customer might skew the business strategy, volume bonuses add an additional layer of skewing.
Back in the day when most dealerships were owned / operated / managed by an individual, the dealer had to make money to stay in business. It was the acumen of the dealer to be a consummate "horse trader" to make money. Incentives were rare to non existent. As well the business office did not exist yet to sell additional products.
Fast forward to today with the "dealer group" phenomenon, hired individuals to manage dealerships, layers upon layers of technology, and several competing franchises owned by the same group. Its an additional impetus to uphold incentives and bonuses.
What do you think...