Dealers Have Tools to Take Guesswork out of Rebates

For everyone involved in the automotive industry, 2021 continues to be a very interesting year where the only constant is change. We all know the story by now: Consumer demand is high, inventory is low.  

But there are other stories happening in the background, such as the rising level of average prices on vehicles, the decreasing level of rebates and the consumer’s growing frustration over being quoted one price online and a different price at the store. 

To be certain, average prices are going up. According to Kelley Blue Book, the average transaction price through July 2021 reached a never-before-seen high of $42,736, marking an 8.2% increase over July 2020. 

Manufacturers Have Pulled Back Rebates 

Because of reduced inventories, manufacturers have pulled back on rebates and incentives. In fact, rebate offers for most segments have continually declined in recent months.

What’s more, actual program offerings or sub-vented lease programs have remained completely flat across all segments.

We’re witnessing the dynamics of supply and demand amplified by American consumers’ savings and inability to splurge on vacations and other discretionary spending opportunities since the start of the pandemic.  

Consumer savings in the U.S. exceeded a staggering $2.4 trillion at the end of 2020. Even though the personal savings rate has since dropped and amounted to 8.9% at the end of September, it still means American households have stockpiled excess savings, setting the stage for a surge in consumer spending.

New Market Dynamics, Outdated Business Practices 

What’s worth calling out – besides manufacturers having pulled back on rebates – is the fact that the process they apply to determine their rebates and incentives remains largely manual. Additionally, the reduction of rebates doesn’t solve a problem shared by manufacturers, lenders and dealers: To create an improved retailing environment and consumer experience, they must eliminate the persistent disconnect between what consumers are being quoted online compared to what they are presented at the store. 

Consumers should not have to endure a disconnected shopping experience, and they no longer have to.

Solutions resulting from combining science, technology and data have been conceived and are currently available. Manufacturers can precisely determine which incentives and rebates are needed to achieve the most competitive position based on live competitor and market data.

And retailers can take advantage of the modern retailing solutions available, which provide consumers consistent and all-inclusive payment quotes – irrespective of where they shop –seamlessly connecting the consumer experience online with the showroom experience. 

Injecting Science Into More Accurate Rebates 

Manufacturers spend more than $40 billion each year on incentives to influence consumer buying behavior to achieve a desired market penetration.

Traditionally, the car makers go through a labor-intensive process to analyze the data related to the effectiveness and impact of the incentive and rebate programs they are offering. This is done to determine how best to position themselves competitively – and to determine how much they must spend to earn their desired market share.   

The process is time-consuming, mechanical and unsophisticated. Decisions are often made on gut instinct without having all the facts. Not only is this very expensive (and seldom accurate), it also is not timely and provides openings for competitors to step in and win market share. 

Almost every dealer in the country has experienced an inability to collect rebate and/or incentive monies from their manufacturer because of misapplication or improper combination of rebates. When this happens, there are two options: Rewrite the contract, which always upsets the customer, or take the difference out of the gross. 

The data and technology platforms needed to overcome this are available, all of which will greatly enhance the consumer experience.

Manufacturers, lenders and dealers can now be seamlessly tied together in a complete system that offers a portal and a dashboard containing all pertinent data necessary to build, offer and transact.

This technology includes a solution that mines, analyzes and manages the billions of combinations and iterations of all lender and manufacturer programs available in the marketplace. 

Helping Dealers Remain Profitable 

This process also enhances dealer profitability because it takes into account each dealer’s specific terms and conditions under which the dealership is willing to transact.

The process also includes every parameter, policy, factor and rule that influences an automotive transaction – and all terms and conditions that are uniquely set by the dealer, including quoting rules for each specific vehicle in the dealer’s inventory.

Rusty West Market Scan head shot_2

With the right data, technology and transactable payment offers, everyone in automotive wins by truly leveraging the right modern retailing process, where the consumer enjoys a frictionless and much improved, consistent experience online and in the showroom.  

Rusty West (pictured, above left) is president & CEO of Market Scan Information Systems, a provider of technology and analytical solutions for the automotive industry.