Dealers say automakers' consumer-facing incentive programs are far too complex and confusing. Automakers may be starting to listen.
General Motors, which dealers say offers some of the most bewildering programs, modified its strategy in January by condensing some incentive programs and eliminating others.
"We tried to be as simple as possible," said Steve Hill, vice president of U.S. sales, service and marketing at GM. "Candidly, we probably have a lot more work to do, but I think the dealers gave us a lot of credit for trying to simplify and make it easier to do business."
GM's changes sound like an improvement, said Mike Maroone, CEO of Maroone USA, but it's too early to know whether they go far enough.
"I won't tell you that [any automaker's program] is simple to the point that I would like to see," said Maroone, who has six dealerships in Colorado.
Cox Automotive data shows that GM's incentives were much simpler in January than in the fourth quarter. GM offered VIN-specific deals through the end of 2019 but none tied to the VIN in January.
Industrywide, consumer incentives have long been a double-edged sword. They increase sales volume but lower brand value and cause consumer skepticism when the same vehicle sells at different price points. They can also be challenging for dealers to manage.
Years ago, dealers could get a straightforward price if they applied the right incentives to the vehicle, said Brad Korner, general manager of Cox Automotive Rates & Incentives. Now dealers "almost have to manipulate that deal scenario in order to make sure that they get everything that the consumer is eligible for as part of the deal."
In the first quarter, franchised dealers surveyed by Cox Automotive ranked restrictive incentives as one of the top five factors holding their business back.