Now that the industry has shelved the practice of building too many vehicles and pushing them on dealers, it's time to clean up the last element of production push: retroactive, stair-step incentives that factories offer dealers for reaching certain sales goals.
As AutoNation CEO Mike Jackson pointed out during last week's Automotive News World Congress, those incentives harm customer loyalty because they lead dealers to resort to irrational pricing to qualify for the incentives.
It weakens customer confidence in the sales process.
Vehicle prices should be set closer to transaction prices. Then incentives should be used to fix a specific problem or manage the life cycle of a product.