Better Incentives In April?

March 29, 2009

forinfo Sales reports from car manufacturers were even more dismal last month than before the current rebates and incentives were put in place.

Does this mean the new incentive programs for April and beyond are going to be better? Maybe.

But car manufacturers will take a look at the successes — and failures — of the old programs to help them create new programs. If a particular program worked well, it might be continued or even expanded. If it did not work well, it might be discontinued, or changed and offered again.

Incentive programs cost manufacturers — and dealers — money. It’s a tradeoff. If the incentives generate enough additional sales to offset the costs, it is a good investment. Otherwise, it a money-loser and can’t be sustained very long.

I’ve heard some people say that dealers and carmakers are so desperate that they will soon be practically giving cars away. Common sense would say that this won’t happen because it’s simply not a good business strategy — it’s a going-out-of-business strategy. Now, there will certainly be some short-term good deals in which high rebates and incentives might make it seem the vehicles are practically being given away, and it loses money for manufacturers, but its purpose is to help solve a (hopefully) short-term problem (e.g. too much inventory) that (hopefully) helps long-term business.

I also hear a common question over and over, “Should I buy now with the current incentives being offered, or wait until next month when the incentives might be better?” The answer: I don’t know. Nobody knows. Even dealers don’t know. The best answer is that if you want to buy now, and the current deals are good, take the deals and buy now. Be happy with the deal, don’t look back, and don’t kick yourself if next month’s deals are a little better.

****** UPDATE (4/4/2009) *****

Taking a look at the new car incentives introduced for April, it appears that the deals are generally about the same as for March, possibly not as good in some cases. However, there seem to be more models with incentives this month than last, especially on American brands. Most programs end 4/30/2009 so we’ll have another chance at month-end to guess about how good the next round of deals will be in May.