Incentives…They Aren’t What We Thought They Were
Think you know all there is to know about incentives? Think again. Over the last year, incentives have become quite challenging and complex—many different programs announced throughout the model-year vs. the normal cycles, revisions, multiple extensions, and changing rules or exceptions.
Incentives are created to stimulate sales, move inventory, and gain market share from competitors. Recent creativities and new approaches by the OEMs, however, can cause confusion and costly errors if strong oversight is not exercised. What were traditional rules for standard programs are not necessarily the same today. Here are a few recent “twists” to watch for that can “trip” you and your staff:
1) Documents required for loyalty, conquest, targeted lease loyalty/pull-aheads, and trade-in allowances can differ from program-to-program. Is it a copy of the title, vehicle registration, lease/finance contract, proof of lease scheduled end-date, payment booklet/statement, odometer statement, and/or proof of vehicle insurance? In addition, a minimum customer vehicle ownership period is a new requirement on some. Trade-in assistance allowances sometime require pre-approvals for eligibility and payment.
2) Which model year is allowed as eligible customer-owned vehicles for loyalty and conquest programs? Could be a 1995 or newer, a 1999 or newer, a 2000 or newer, or sometimes any model year. Certain programs require specific models rather than the entire nameplate or OEM’s carline.
3) Some private/appreciation offers have limitations—only the original coupon is valid. If there is a manifest, some do not allow adding customers for eligibility, as in the past. Lately, however, no manifests are available. So be sure the coupon displays a certificate number and is not expired. Read the fine print, then locate the applicable program bulletin for other rules.
4) A shorter application period on programs such as Down Payment Assistance (DPA) Allowance.Such programs subsidized by the OEMs’ captive finance companies often have a 60-day submission/payment period vs. the normal three to six months. Also, all DPA allowances are not created equal; some are only available to certain credit tier-level or beacon score customers.
5) Dealer cash is not always dealer cash. For certain delivery/sales types (factory employees, suppliers, dealership employees), the standard rule is that dealer cash must be passed to those customers. However, “Value Certificates” and “Dealer Bonus Cash/Dollars” (earned from allocation or over-age inventory) are the exception, for most part. For example, for 2011 models it cannot be passed; for 2010 models, it may be passed; for 2009 models, it must be passed. Confusing?
6) Compatibilities and stacking. A constant maze. One of the many errors and confusion seem to be with “Dealer Bonus Cash/Dollars” (above); they are not compatible with rate support. Also, special OEM retiree/attrition vouchers are not compatible with other private offers/coupons.
The bottom line—don’t assume anything! Every bulletin has to be read in its entirety. Pay close attention to the section titled “Documents Required for Audit Purposes”. Appoint the right person(s) as your incentives expert and always use the best tools available to manage incentives. These will all make the difference in $500-$5,000 incentives rejecting or being charged back. Neither loss you can afford.
Sherralyn Peterson is an automotive incentive specialist, with 30 years of automotive experience. She helps dealerships prepare for Audits, conducts Compliance Reviews, performs staff training, and resolves Incentive issues. For more information, call 312-310-8380, email at email@example.com, or visit www.sherralynpeterson.com.