Abolish All Rebates

[crowe]

The rebate game started w/ a few hundred bucks on a unit. Now it can be 20% or more of the price. When do we get reimbursed for this farce? Weeks after the unit is sold & months after we paid an inflated price to cover the built in rebate. Just think of all the interest paid by the dealers on this funny money.

Rebates were a good gimmick for a long time but have become a money sucking addiction. The rebate model is not working like it used to. Some lenders now are deducting the rebate before calculating the LTV & customers have come to expect a rebate, which may alone be the best argument to end rebates. Remove rebates from the system & price/payments will be about the same. Price the products right to begin with & we will all be better off.

Reordered a now strong selling product w/ a high rebate & odds are by the time it comes in the price is higher & the rebate is lower. So it sits eating money until the rebate increases to sell it so you will order more & the cycle repeats.

I remember this biz when rebates didn’t exist. The dealer had more margin & control. I wonder if that’s why they invented rebates.

End rebates on everything. The MFGs are counting on consumers forgetting that $20 mail-in rebate on the widget they just bought & other retailers w/ the instant rebates are probably sick of the money float too.

The only way to end rebates is to make them illegal. Otherwise all it takes is one MFG to give a rebate & the rest think they have to join in to compete.

If an item is to be discounted that decision belongs to the retailer/dealer that actually owns the item not the MFG.

Presented in the right light the politicians should join to end this price fixing fraud.

[MARV]

THE main problem I have with rebates are that salespeople (and some sales managers) have a tendency to sell the deal more and the vehicle less IMHO. Sales managers will advertise huge rebates/APR on the windshield which in turn encourages SP's to prattle on about the rebates etc. Granted some customers do come in looking for the latest deal from the manufacturers the practice continues to perpetuate itself. Our new car peeps will drag out the 'vincent report' in front of the customer and then analyze which way they think the deal ought to go then present it to the F&I office as such.

In the infamous words of one Don Ready of "The Goods:LIve Hard Sell Hard" "Sell the metal, Sell the metal, Sell the metal!"

[crowe]

I agree. We preach if you want to sell a $30k unit you better make a $30k presentation, if their not sold on the unit & the dealership the deal will not matter & the 1st one that talks about money looses.

But I still hate the rebate system. If MFGs want to stimulate sales let them use incentive financing for the customer as in buy deeper. They shouldn’t be able to control the price on units they have already sold the dealer by adjusting rebates. We own the inventory & they have been paid in full up front. Dealers should control the markdowns & margins.

[MARV]

The manufacturers have an undying belief that they can 'sell' cars off their storage lots by appealing to the customers with rebates/incentives.

[Ralph]

a few years ago, Daimler thought they were going to wean Chrysler off rebates...and everyone else just increased them and grabbed market share. The tough thing is to get everyone off the drug at once and stay that way. Legislation would do it, but I can only imagine the auto lobby and other groups would fight it...it makes too much sense. I think we can read what the world is like now by just using the simple proof..."if it makes sense, expect the opposite."

We were just talking today, they announced the already dead PT Cruiser now is pretty loaded for $18,995. According to Chrysler, it carries a $2000 consumer and $1000 dealer...that they "promise" will continue for a long time. they need to run the PT out of production to prepare for the 500. These announced rebates I can guarantee will be dropped once the production line stops. What incentive for Chrysler is there to continue rebates once they've sold them all?

[possum]

I can remember Dodge selling us on ordering '07 new Trucks, then putting them into the "Service Loaner Program". The pitch was that rebates would never be greater than this deal. We bit, then 2 months later rebates went up, and we were caught with the "demo" trucks and the fixed rebates.

The factory will promise anything to keep the line open. (insert: Jim Press here)

[XDCX]

Originally Posted by crowe

Some lenders now are deducting the rebate before calculating the LTV...

In my opinion if this trend continues it will mark the end of the rebate insanity. If you eliminate "deal structure" and the ability to bury negative equity with rebates the whole game could come to an end.

Rebates are inefficient - especially in states like Washington where customers have to pay Sales Tax on the rebate amount.

That said, my bet is most OEMs like rebates. The ability to "float" between the Invoice Date and the Incentive Payment Date is a great source of interest-free cash. Additionally, the ability for OEMs to audit Incentive Payments provides another measure of control over their dealers.

[Ralph]

The damn things are so hard to keep track of, (on purpose I'm sure), and to properly document sometimes....rebate audits are another profit center for the manufacturer.

[crowe]

Confusion Is A License To Steal!

The abolishment of rebates needs to be pursued as a consumer rights issue. I think the majority of government & the public could care less about car dealers right now.

Dealers need to get stronger franchise protection. The OEMs have too much power over dealers. There was a time in this country when an OEM would break a dealer on a whim. That’s why state franchise laws were passed. We all saw what BK did to state franchise laws. It is time for a federal franchise law with some rules that cannot be broken by a BK court.

All politics are local & most reps are up for reelection next yr.
What happened to the terminated dealers should have been illegal & must never happen again.

[CUD]

Rebates are here to stay. A few makers have tried to introduce a model with a reaonable price and no rebates and failed. Raise the price by $2,000 and add a $2,000 rebate and you get interest.

Crowe was right, what started with Joe Garigiola saying "Buy a car, get a check." has turned into a requirement now.

[The StraightShooter]

Sadly, I think that ship has sailed and will never come back. Now that we had the government get in the game last summer with C4C, I don't see any way back to the way it was.

Does anyone else remember the 2004 Durango launch?

[JJRRACING]

I will say that for the banks that still allow rebates, They help out a TON for the Burried customers...

[Ralph]

LOL, to bury them deeper. Welcome aboard JJR

[JJRRACING]

LMAO... They Burry themselves... we just push them along... In the end it's their decision...

[JJRRACING]

I remember the 04 Durnage Launch, (kinda) but what was so special about it...