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If
You Know Their Rules ...
You Can Play Their Games
The
Hidden Profit
Now we have to look for the hidden profit. This comes from
two potential sources:
-
Factory-to-dealer incentives
-
Dealer
hold-backs
Factory-to-dealer incentives
Frequently, the manufacturers-often called "the factory"
in car parlance-will offer their dealers incentives on certain
cars in order to help move inventory. The incentives serve
to lower the cost of the car t o the dealer and make it possible
for the dealer to offer deals, negotiate deeper discounts,
and generally provide a customer with the opportunity to buy
a car for a lesser price. These incentives can range from
several hundred dollars to four or five thousand in the luxury
car range. This is information you'd like to have for your
negotiation.
One
good source for this information is the industry magazine
Automotive News, a weekly publication from Crain Communications.
You can often find copies in your library, or possibly the
car loan department of your bank or credit union will have
a copy. In the back ')f the magazine you'll usually find a
section called "Incentive Watch," which shows current
dealer and customer incentives. In one issue we found dealer
incentives ranging from $200 up to $5,000. Obviously, the
higher the retail price of the car, the higher the factory
incentive. In one issue we found dealer incentives ranged
from $300 to $3,000. Understand that these incentives are
likely to change frequently.
In
the case of the Volkswagen Jetta, we found that at the time
of ' his writing-and by the time you read this it will have
changed-the factory was offering dealers an incentive of $500.
This is profit and should be figured into your calculations.
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