I agree with your assessment of the rebate cancer (defined as uncontrolled growth) as outlined in "Incentives must grow ... or else" (July 12).
I would hasten to add that there is a tremendous danger to all dealers in the hidden costs of the rebate wars.
While the manufacturers are forced to "adjust" the average transaction prices of their products (since that is what rebates really represent), it is the dealers' flooring accounts that are carrying an undue burden.
If rebates must approach $4,800 per vehicle to excite buyers, that is an additional $4,800 per unit that the dealer must floor and pay interest on.
Especially in small, select stores, that $4,800 will represent frozen flooring dollars that cannot be used to purchase vehicles.
Higher rebates, while necessary to motivate buyers, will become a burden and a drain on capital for dealers.
In that regard, I hope that DaimlerChrysler succeeds with its strategy of pricing vehicles closer to their true transaction prices instead of relying on soaring rebates and gimmicks.