What Dealer Incentives Can Mean for Car Buyers

The incentives offered to dealers by manufacturers can often create trickle-down savings for car buyers.

Elliot Rieth | 

Jun 21, 2024 | 3 min read

Getty Images

If you're shopping for a new car, it could be in your best interest to visit multiple dealerships and consider various manufacturers to find a deal that works for your budget. During this search, you may discover dealer incentives, an industry practice that could be beneficial — if you know how to leverage it.

Dealer incentives can lead to lower prices, rebates, financing offers, or additional non-cash perks on your next car purchase. But you may have to do your own digging to find these potential savings opportunities.

Understanding Dealer Incentives

Manufacturers may offer dealer incentives to car dealerships to motivate the sale of specific vehicles, allowing for new products to be introduced or for old inventory to be cleared out. These dealer incentives, also known as factory-to-dealer incentives, may be distributed on a regional level to boost competition among dealers while lowering their purchase costs and improving their profit margins.

What Dealer Incentives Mean for Car Buyers

The benefits of dealer incentives aren't exclusive to the dealerships themselves. These dealer incentives could look like cash rewards for salespeople who effectively sell a targeted model or reach a particular sales goal. Due to the pressure of hitting sales numbers, these salespeople may even be willing to make a deal with a car buyer so that they can achieve their sales goals, passing savings on to the shopper to motivate them to buy.

If you're aware of current dealer incentives, this could also help you negotiate — even if dealers don't explicitly advertise lower prices. Keep in mind, however, that dealers are not obligated to offer car buyers any savings, even if they are receiving incentives from the manufacturer.

Common Dealer Incentives

Depending on your region, choice of manufacturer, and dealer, the dealer incentives that could benefit your purchase will vary. How savings are passed on to you could look like:

• Lower APR financing rates, which can help you save on long-term interest costs
• Customer cash rebates that lower the overall price of your purchase by a set amount
• Special lease rates to motivate you to choose a lease over buying

Other financial incentives may be tailored to your previous purchasing behavior. Loyalty incentives could be offered for consistently buying vehicles from the same manufacturer or auto group. For example, this could involve purchasing a second car for your family from the same dealership where you purchased your first car.

On the other hand, so-called conquesting incentives could be offered for switching from one manufacturer to another. Both of these incentive types typically require proof that you own a vehicle that fits their criteria, so bring documentation if you plan on inquiring about these deals.

There are also non-financial incentives that may help you get more value out of a vehicle purchase. Some dealers will offer complimentary equipment upgrades — such as a better sound system — that may vary in value. Others may offer free oil changes, maintenance, car washes, or even additional warranties on certain incentivized vehicles.

Where to Find Factory-to-Dealer Incentives

You may be able to find dealer incentives by checking with your local dealerships or watching for advertisements. Some sites, such as Edmunds and CarsDirect, provide updated monthly lists of incentives that can help you with your search.

You may also be able to find deals specific to certain brands by visiting the manufacturer's website. However, keep in mind that dealer incentives will vary by area and may not apply to your chosen dealership.