Factory-to-dealer cash, sometimes called “marketing support”, is a form of cash rebate from car companies to dealers to help promote the sale of certain vehicles. Dealers can use the cash in almost any way they like — TV advertising, tent sales, mailings — but most, if not all of the money usually is given back to customers in the form of price discounts.

Factory-to-dealer cash incentives are offered on a month-to-month basis, as needed, and expire at the end of the month. A particular vehicle model might have an incentive one month but not the next.

The largest factory-to-dealer cash incentives are offered on slow-selling vehicles, leftover previous year’s models, models with large inventory, or models that will soon be eliminated or replaced.

Here are some of the best factory-to-dealer incentives being offered for May 2011, ending on May 31:

2011 BMW ActiveHybrid 7 – $2000

2011 Dodge Dakota – $4500

2011 Mercury Grand Marquis – $5500

2011 Cadillac DTS, STS – $7000

2011 Chevrolet Corvette, HHR, Impala (selected styles) – $4000

2011 Land Rover Range Rover – $2000

2010 Mercedes CL, S-Class (selected styles) – $10,000

2010 Mercedes C-Class, CLS, R-Class, SLK (selected styles) – $5000

2011 Infiniti FX50 – $3000

2011 Saab 9-3, 9-5 – $3000 – $4000

2010 Audi A6, A8, Q7, S6, TT, TTS (selected styles) – $9700

These incentives can be combined with any available customer rebates, low interest rates, and additional dealer contribution (dealer-provided price discount).

You can get free price quotes on any of the above cars from Edmunds.com.The quotes will automatically include any cash-back rebates or discounts that are currently available.

Subaru

All the Subaru lease deals end on May 31, 2011 and allow 10,000 miles per year. What is interesting a little different is that they have deals for a variety of terms (lease months), including 24 months (unusual), 36 months, 39 months, and 42 months (unusual). Of course, the longer your lease term, the lower the payment.

These deals are created by reducing the lease price, lowering the normal interest rate (lease money factor), and boosting the normal lease-end residual.

All the deals require a modest cash down payment (or trade-in vehicle), although you will have to add the first month’s payment and official fees to your “due at signing” costs.

LeaseGuide.com has evaluated these deals and has found, in general, that most of the deals rate “Excellent”, except for the 42 month term deals which rate a bit lower at “Good”. 

Here are a sampling of the cheapest of the Subaru special lease deals for May 2011. There are many more deals than we can show here.

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It has directly affected Japanese carmakers such as Honda, Toyota, Nissan, and Mazda to the point that production has been significantly reduced and, in the case of some models and styles, actually halted.

However, the indirect effects may be even more significant. Many American carmakers depend on parts and electronic components from Japan. For the lack of a single part, a car cannot be built. Therefore, we’ll see may see shortages across the board, regardless of where manufacturing takes place.

What does this mean for car deals in May 2011?

We might be wrong — and we hope we are — but we believe that the great new-car purchase and lease incentives that we’ve come to know in the last few months will be grinding to a virtual halt beginning in May 2011. And it could last for many months. When supplies are limited and demand is high, there’s no need for sales incentives.

Sure, we’ll see continuing incentives, although not as good, on leftover 2010 models, and even on some 2011 models that have already been replaced by 2012 models. Some brands such as Korean Hyundai and Kia that have not been heavily affected by the earthquake may take advantage and offer new incentive programs.  European brands such as BMW, Mercedes, and Audi may also continue offering modest incentives on selected models and styles.

The bottom line is that we think new-car deals for May 2011 will not be nearly as good as in the past. You’ll have to look longer and harder to find good incentives.  Even without incentives, you might find it difficult to find the exact model and style you want. Unfortunately, this situation will not go away overnight. It will be some months, maybe into next year, before things return to normal.

We at Best Car Deals will also have to work harder to find the good deals and incentives to post here on this web site. So, stay tuned. We’ll do our best .

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Why?

Because most car manufacturers are trying to get potential buyers’ attention by offer high factory-to-customer rebates, as well as other incentives. Rebates of $5000 or more are available on some brand and models. Rebates are especially heavy on leftover 2009 models.

Although we continue to highlight specific car brands and models that have good incentives, we thought it might be useful to look at those with the highest and best rebates right now.

Before we show you our list, let us remind you that rebates can sometimes vary depending on the area of the U.S. you live in and the rebates are limited-time promotional deals that will expire at the end of the month.

Here are the vehicles that currently have the highest customer rebates ($4000 or higher). All are for 2010 models unless specified otherwise.

• 2011 BMW 3-Series and X5 - up to $4500 rebate on selected styles
• Jeep Commander and Grand Cherokee – $4000 rebate
• Ford F-450 Super Duty, F-350 super Duty, F-250 Super Duty – $4000 – $5000 rebate
• 2009 Ford F-250, F-350, F-450 Super Duty – $5000 rebate
• Buick Lucerne – $4000 rebate
• Chevrolet Avalanche, Silverado 1500 Hybrid, Silverado 2500/3500 HD – $5000 rebate
• Chevrolet HHR, Silverado 1500 – up to $5000 rebate
• GMC Sierra 1500 Hybrid, Sierra 2500/3500 HD – $5000 rebate
• GMC Sierra 1500 – $4500 – $5000 rebate
• 2009 Buick Lucerne – $4500 rebate
• 2009 Buick Enclave, LaCrosse – up to $4000 rebate
• 2009 Chevrolet Corvette – up to $5000 rebate
• 2009 Chevrolet Avalanche – $4500 rebate
• 2009 Chevrolet HHR, Silverado 2500/3500 HD (and related GMC models) – up to $4500 rebate
• 2009 Hummer H2, H2 SUT, H3 – $5000 rebate
• 2009 Hummer H3T -$4000 rebate
• 2009 Saab – up to $9000 rebate on selected models
• 2009 Kia Sorento, Spectra – up to $5000
• Nissan Titan – $4000 – $5000 rebate
• Nissan Armada – $4000 rebate
• Nissan Altima Hybrid – up to $4000 rebate
• 2009 Nissan Altima Hybrid – up to $4750 rebate

If you are looking for the best rebates currently available on 2009 and 2010 (and some 2011), consider the above list. With these kind of high rebates, it’s not difficult to buy a brand new vehicle for less than a used vehicle of the same model that’s a year or two old.

You can get free price quotes on any of the above vehicles from Edmunds.com.The quotes will automatically include any cash-back rebates or discounts that are currently available.

For example, the Toyota Corolla LE with lots of extra equipment and options is being offered for $149 a month. This is a 36 month lease, 36,000 total miles allowed, and $1999 is due at lease signing. The $1999 includes a $1200 down payment, first month’s payment (standard in leasing), and a $650 acquisition fee (standard in leasing).

If you cannot afford the $1200 down payment, you can pay less but, of course, the monthly payment amount goes up. For example, if you can only afford $500 down, the payment goes to $169. If you can afford no down payment (but still pay the first month’s payment and the acquisition fee), the monthly payment goes to $182.

How can Toyota offer such great lease deals?

First, the price of the car has been discounted about $2000. Second, the lease-end residual value has been set much higher than normal, and finally, the lease money factor is .00002, which is equivalent to a very low 0.5% APR interest rate. The combination of these three things makes for a very low monthly lease  payment for this excellent automobile. It just doesn’t get much better.

If this explanation doesn’t make sense to you and you don’t understand car leasing, we recommend strongly that you learn how leasing works before you decide to lease. We suggest LeaseGuide.com, one of our sister web sites.

Most current incentive programs expire either April 30 or May 3, depending on manufacturer. New deals won’t be announced until a few days after the old deals expire.

However, based on our experience, we can see directions and trends that give us a pretty good idea of what is going to happen.

First, the Toyota situation is affecting not only what Toyota does, but what many other manufacturers are doing with regard to incentives. Toyota will continue offering great deals such as the large rebates, 0% APR loans, and special lease deals that it has been offering in April. They also offer 2 years of free maintenance. These deals will not only continue but will even get better as Toyota works to restore customer confidence in it’s brand.

Other manufacturers, want to take advantage of Toyota’s situation and take business away from them. Therefore, we’re going to see even more aggressive incentive programs in May 2010 and beyond that will try to move customers to buy now.

When we look at today’s overall car buying opportunities, it is one of the best of all time for automotive consumers. There have never been so many 0% APR loan deals, so high rebates and dealer cash, or any better lease deals. Some companies are being very aggressive with special deals. Honda comes to mind, as does Hyundai-Kia, and Ford. Most other companies, except for some luxury car makers, are also pushing hard with good incentives.

Not only are deals better than ever, but vehicle quality, reliability, styling, fuel economy, and safety have improved to new highs in the last couple of years. You get better cars, at better values, than ever before. It’s just a great time to buy a new car.

Should you wait a while longer to see if the May 2010 deals get any better? Maybe. But consider this:  Many manufacturers are already offering 0% loans, huge rebates, large factory-to-dealer rebates, and special lease deals with super-high residuals, big price discounts, and almost-zero money factors. You just can’t get lower than 0%. You can’t give rebates that totally eliminate any profit that you have to stay in business, you can’t expect dealers to sell cars for less than they buy them for and still be around the next time you need a car. The point is that the current deals are just about as good as they can get.

Volkswagen

Additionally, other models that don’t get 0% APR loans, do get low-interest (typically 1.9%) loan deals. Not all styles get such deals.

The above mentioned lease rebates (typically in the $500-$1500 range) only apply if the customer leases through Volkswagen’s captive finance company, VCI. The lease deals include reduced money factors (finance rates) and improved lease-end residual values to create low monthly payments.

If you don’t understand how car leasing works, we recommend that you read the Lease Guide at LeaseGuide.com.

Here are a few examples of current Volkswagen lease deals:

2010 Volkswagen Jetta – $199 a month, 36 months, 36K miles total allowance, $1999 due at signing

2010 Volkswagen Routan S - $289 a month, 36 months, 36K miles total allowance, $2499 due at signing 

2010 Volkswagen New Beetle – $199 a month, 36 months, 36K miles total allowance, $1999 due at signing 

2010 Volkswagen GTI – $279 a month, 36 months, 36K miles total allowance, $2299 due at signing 

2010 Volkswagen Golf – $199 a month, 36 months, 36K miles total allowance, $1999 due at signing