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A MAJOR US study into the power of incentives to increase automotive sales has found that their use has jumped 50 per cent over the past four years, and yet more than 50 per cent of customers have little idea they were available.

The Cox Automotive Incentives Study report said that 32 per cent of customers were not aware of any incentives – including customer rebates, discount financing and lease discounts – and a further 21 per cent had very limited familiarity with incentives.

Only 24 per cent of buyers had researched and requested the available incentives.

However, the report said, the people who were aware of incentives are more likely to research what is available at least weekly throughout the purchase process.

What incentives work best?

Cox Automotive said cash rebates – such as factory rebates or cash back – were twice as preferred as other inducements such as extended warranties or special finance rates.

“Compared to non-luxury shoppers, luxury shoppers are more likely to want free maintenance,” the report said.

The cash rebate scenario was shown to be attractive to 39 per cent of respondents, compared with extended warranties (either free or discounted) that was important to 20 per cent of people, and a special finance rate that also attracted 20 per cent.

Offering a free maintenance program netted 15 per cent of respondents, while free upgrades to existing vehicle features – such as infotainment and satellite navigation – only attracted six per cent.

Asked what would motivate them to make a decision to buy a car within a week before the incentive expired, most said the tipping point would be cash rebates, followed by zero-interest rate finance, then an extended warranty and then free maintenance.

Cox Automotive said dealers can increase sales through incentives by:

  • Pairing cash rebates with limited-time offers will increase the sale of slow-moving stock.
  • Targeting luxury buyers with messaging around free maintenance and feature upgrades.
  • Target all shoppers with messaging around cash back and special financing rates.
  • Prominently and consistently presenting incentives across OEM and third-party websites where over two-thirds of shoppers research them.
  • OEM and dealer advertising around incentives should be consistent across all tiers.
  • Dealers can use tools that automatically account for the latest factory offers to help eliminate the time-consuming complexity of managing incentives and rebates.
  • Include incentives and special offers prominently in online vehicle descriptions and advertisements to show that OEMs and dealers are working to offer customers the best possible deal.
  • Review incentives as part of the sales process.

The report added that more than two-thirds of buyers – particularly luxury-car buyers – use third-party sites for their research.



By Neil Dowling