Build It Right From The Start

Automotive digital transacting has exploded over the last year.  April 2021 sales doubled over April 2020 and we are forecasting an estimated 17.1 SAAR!  Research shows over 70% of buyers would prefer to do their shopping, credit application, purchase configuration and negotiations online saving the final paperwork for digital, in store or at home completion. Anything that was guarded by proprietary technology has been shredded for the good of transparency in this new paradigm. 

Vehicle content comparison, pricing, payments, financing, and aftermarket purchases have transitioned the sales process online supported by many of the digital retailing applications and tools.  This has created a strong need for accurate vehicle build data, rates, rebates, and the ability to define a vehicle with the specific VIN options, packages and incentives.  Getting these pieces right with build data is required content across advertising Tiers I – III by OEM’s, dealers, integrators, and software/technology providers.

The most challenging areas are vehicle specific option and equipment packages describing a VIN or unique attributes of a vehicle.  Some full-size pickups having close to 3 million unique ways a model can be built, and it is critical to know the exact content of the vehicle for matching incentives 1:1 with the vehicle option/package codes leading to correctly pricing the vehicle for the type of transaction (cash, finance or lease).  Also include distributor options and VIN Specific offers which require assignment to the VIN after delivery from the manufacturer and as part of the accessorizing or incentivizing of slow selling inventory.

Solving the “last 6 mystery” continues to be an online stumbling block for much of the industry. This has been an issue within the industry for many years, however, we are seeing the gap in accuracy close significantly with the harvesting and validation of build data through syndicated listings, OEM MSRP specs, or a combination of all of these data sources.  This is clearly an advantage for advertisers, software providers and consumers.

Consider the importance of using this information to correctly advertise pricing, payments, and incentives for an industry spending over $50 billion dollars on customer discounts annually.  The importance of getting the pricing and payments right, the incentives assigned correctly at the VIN level supports cost reductions in BILLIONS of dollars.  OEMs, captive finance companies and auto lenders must get this right for consumer lending regulations and supporting a smooth transition from online transacting to contracting payments based on the tier, term, lender, consumer demographics, incentives, location and tax, title, and license fees. 

Based on the type of transaction and term of the financing, we have seen differences in payments of hundreds of dollars for the same vehicle on multiple websites.  You can see the lost credibility, advertising costs and sales when the consumer realizes their payment is increasing by that amount once they decide on the vehicle they are ready to purchase.

Additionally, extended warranties, insurance (and insurance replacement costs) carriers are all dependent on getting accurate build data for correct menu pricing online.  Using these attributes also supports requirements for meeting compliance and disclosing a fundable offer to the consumer.

Consider the importance of using build data and incentives correctly across all advertising, pricing and payment publishing compared with the wasted spend of not including this level of detail.  These vehicle attributes are available and are a requirement for correctly transacting online and in store. 

Automotive retailing has advanced quantum leaps over the last 12 months.  The industry is facing lean inventory and profitability on every sale is vital for the industry.  Advertising a vehicle correctly with these attributes is the most cost-efficient method of maximizing multi-channel publishing, digital commerce tools and consumer search using content description tools like photos, CGI, videos, and vehicle side-by-side comparisons.  Consumers have expectations that the correct description, price and payments are being advertised and technology allows this to happen today. 

Get it right by using build data and incentives and realize advantages through technology partners, integrators, advertisers, and dealers.  The risk and rewards are higher than ever for using build data and incentives to power pricing and payments correctly across all marketing, advertising, and sales channels.

The Industry Insights team at Cox Automotive is forecasting first-half auto sales to be down 24.2% versus the first half of 2019 – a bad result that might have been worse without aggressive incentive spending by the automakers.

In total, incentive program volume was down in the first half of 2020 compared to both 2018 and 2019. Incentive spending by the automakers increased, however, as automakers pushed heavy incentives to pull would-be buyers off the sidelines. The aggressive spending had an impact on consumers. Research by Cox Automotive in June indicated 92% percent of 6-month intenders were expecting favorable terms with a new-vehicle purchase.

Incentive program volume, which is a simple measure of the total number (not value) of incentives offered in a given month, was down 7% in the first half compared to 2019. After high program volume in January and March, when automakers were adding and changing programs throughout the months to find a mix that worked, volume dropped notably in the second quarter. Automakers simplified incentive programs and reduced the number of different offers as inventory fell throughout the quarter.

Incentive spending as a percent of average transaction price, on the other hand, increased in the first half of 2020 compared to 2019 levels. The industry average of 11.4% is up from 11.1% in all of 2019 and well above the five-year average of 10.8%. Most automakers upped their spending per sale in the first half: 21 of 32 brands showed an increase. Our analysts, however, are expecting the level of spending to decrease in the second half of the year, driven by lower inventory and the need to conserve cash.

Incentives as Percent of Average Transaction Price

Auto sales will be confirmed on Wednesday, July 1.

https://www.coxautoinc.com/market-insights/march-madness-shifts-the-landscape-for-vehicle-incentive-strategies/

March madness typically springs buyers back into the market as many consumers benefit from the extra cash of a tax return. This March, however, saw most shoppers sent home amid COVID-19 concerns to guard against infection, severely impacting our economy and teaching us new terms like “social distancing.”

The entire distribution chain for new and used vehicles has nearly idled, with major slowdowns from manufacturing to retail, auctions to transportation. Dealerships are under a multitude of federal, state and local restrictions which have caused confusion and have effectively ground the industry to a halt.

In mid-March, when the slowdown accelerated, most all automakers dusted off the playbook from post-September 11 and the financial crash of 2008, shifting their incentives from transactional offers (dealer and consumer cash) to offers that help address the severe drop in consumer confidence.

By mid-March, we saw a flood of offers that generally fell into three categories:

• 0% financing for 84 months
• 1st three payments paid by the captive lender
• Payment deferral and forgiveness guarantees due to employment uncertainty

These are strong value propositions for consumers who need to buy a vehicle as soon as possible, for example, when a lease is up, or there is a vehicle accident replacement. Consumers can see these many offers on shopping sites across the internet, including Cox Automotive’s Autotrader and Kelley Blue Book and on the multitude of dealer websites run by Dealer.com. Kelley Blue Book is publishing a continually-updated summary of programs from automakers and lenders.

Many consumers can apply these new incentive offers to in-stock vehicles and lock the deal online, perform a virtual 360 walk around, and in some cases, they can receive home delivery if they have concerns about visiting the dealer facility.

Similar confidence-building incentives got the U.S. auto industry rolling again in the aftermath of the September 11 tragedy. Back then, the market rebounded quickly. This time may be different, however, as the impact on the economy and the global nature of this disease is new to everyone.

We know the auto market in the U.S. is falling fast and will drop significantly from last year’s 17 million level. More importantly, though, what’s next? When will consumer confidence return?

From experience, we know our automakers and dealers will batten down the hatches and weather this storm. But the landscape will be different when it passes, with a shift toward more digital retailing, online purchasing tools, and home delivery services for new and used vehicle sales as well as service and repairs.

These are not new concepts. They are, however, quickly becoming a core function of good auto retailers. While this pandemic will pass, memories of social distancing will stay in people’s minds. In other words, the pandemic will likely drive a paradigm shift in consumer expectations and auto retailing services. OEMs and dealers will need to improve their online skills to make online retailing more efficient and seamless.

In our new world, the ability to provide an accurate, timely price to would-be buyers – quotes that accurately incorporate all relevant and current incentives – will become more important than ever.

Auto sales in 2019 came in above the magic 17-million mark, according to our team at Kelley Blue Book, but just barely. Vehicle sales of 17,042,363 kept the streak alive, but that number includes medium duty pickups and exotic cars. As our Chief Economist Jonathan Smoke notes, it was fleet sales that got us to 17 million. Fleet volume was up last year, likely at a record level, while retail sales were down, a sign that consumers are buying fewer new cars and the market is under pressure.

If we use incentive activity as a measure, it’s clear the automakers were working hard last year to maintain the strong sales pace and protect profit margins. Production and new vehicle launches helped make 2019 a record year for incentives, according to our team at Cox Automotive Rates & Incentives.

It is true that incentive volume tapered off in December – the low point for the year, in fact – but the volume was still enough to push 2019 to a record level as seen in the chart below. The lower volume in December was likely due to many Black Friday-type incentives introduced in November and carried over unchanged through December. GM and FCA, for example, moved to employee pricing in effect lowering the MSRP and incentives needed through much of the final two months. The record volume of incentives were applied at VIN/vehicle levels in order to target spending only on vehicles which needed discounting while protecting margins on more desirable vehicles or fresh product not needing large discounts.We know consumers had a large selection of vehicles to consider from both 2019 and 2020 model years at year’s end, with large discounts and favorable pricing and payments to help buyers stay within budget. Still, even the heavy incentives were not enough to drive strong sales numbers, which came in lower than forecast in December.

While incentive volume was lower in December, the value of those incentives remained high. In fact, 2019 ended at what is likely a record for incentive spending as a percentage of average transaction price (ATP). Incentive spending has been consistently climbing for the past five years, as the industry has kept alive its streak of 17 million. In fact, incentive spend in 2019 was 22% higher than it was in 2015, climbing from 9.08% of ATP to 11.12%.The year ahead won’t be any easier. With inventory levels low, we can expect incentive volume and spending to be held in check. But lower incentives could also spell a slower than normal Q1 for retail sales. Our Industry Insights team is forecasting full-year sales in 2020 to come in at 16.7 million vehicles, as measured by Kelley Blue Book.

Are automakers ready to give up on the streak? Incentive activity in early 2020 will likely tell.

Brad Korner is general manager of Cox Automotive Rates & Incentives. The  Cox Automotive Rates & Incentives  (CAR&I) team has developed a methodology for measuring the accuracy of data used to calculate pricing and payment information presented through dealer service provider tools (e.g., dealer websites, inventory management, digital retailing & advertising, desking, equity, etc.).  Approximately 17,500 individual dealerships –  rooftops, in automotive parlance –  in the U.S. rely on CAR&I  incentive  data  for powering  5 different software applications through Cox Automotive native software/sites and our many industry partners. In all, an estimated 90,000 applications are relying on CAR&I data in a given month, providing valuable information to 40 million shoppers.

General Motor’s UAW workers got back to work this past week, resuming production at plants across North America and ending a 40-plus day work stoppage. GM and its dealers went into the strike well prepared in terms of inventory, with new-vehicle stock well above the industry average.

GM’s new-vehicle sales in the U.S. in Q3 were strong, thanks in part to aggressive incentive work. October auto sales will be reported on Friday, November 1, and our team is forecasting GM to come in at approximately 230,000 units, a 5% drop versus October 2018. The market is expected to be mostly flat.

Considering the strike dragged on for most of October, our Cox Automotive Rates & Incentives team took a careful look at GM incentive programs during the month to assess the company’s motivation at a time when new products were not being built to replenish supply. What we found: It was Business as Usual with the GM sales department, as they didn’t lift their foot off the incentive throttle.

For the most part, GM incentives in October were equal to or greater than the incentives in September. In some cases, the incentive packages improved significantly. Consider the Chevrolet Equinox: The general incentive package of guaranteed and conditional consumer cash was unchanged for 2019 models, September versus October. The incentive package increased by $500 for 2020 models. The same story is true with the popular new Silverado. Incentives on the 2019 models stayed consistent. For 2020 model year vehicles, the offer increased by $3,000 during October, all guaranteed customer cash.

Reviewing total incentive programs tracked by our rates and incentives team shows a similar business-as-usual story in October. By the end of the month, GM had posted 197 different programs across all its brands, a number very similar to its 12-month average of 193.

In other words, the 40-day strike, at this point at least, had no discernible impact on GM’s incentive strategy. From a sales incentive point of view, GM and its dealers continue to focus on moving the metal.

We know many factors shape a company’s incentive strategy, and inventory is just one measure. Certainly, GM’s competitors continued to be aggressive in October, forcing GM to maintain or increase incentives to help their dealers maintain competitiveness – strike or no strike. As long as there is inventory, the sales march must continue.

Our industry insights team will take a careful look at GM inventory at the beginning of November. How that number impacts GM’s incentive behavior through the end of the year is yet to be seen.

Brad Korner is general manager of Cox Automotive Rates & Incentives. The Cox Automotive Rates & Incentives (CAR&I) team has developed a methodology for measuring the accuracy of data used to calculate pricing and payment information presented through dealer service provider tools (e.g., dealer websites, inventory management, digital retailing & advertising, desking, equity, etc.). Approximately 17,500 individual dealerships – rooftops, in automotive parlance – in the U.S. rely on CAR&I incentive data for powering 5 different software applications through Cox Automotive native software/sites and our many industry partners. In all, an estimated 88,000 applications are relying on CAR&I data every month, providing valuable information to 40 million shoppers.

://www.coxautoinc.com/market-insights/as-the-uaw-strike-wore-on-general-motors-kept-pushing-new-vehicle-sales/

*This article was originally posted to the Cox Automotive newsroom.

As 2019 continues to deliver strong new vehicle sales, we’re seeing a consistent transition from general incentive offers to more specific discounts, which is driving record volume of incentive programs being offered to consumers and dealers (see chart below). This transition is indicative of an industry moving from fewer, broad-brush offers to many, very specific bonuses based on, among other factors, geography, vehicle option packages, and length of time in dealer inventory. We continue to track more VIN-specific incentive packages as well.  

September is typically the time of year dealers are carrying up to three model year vehicles (2018, 2019 and 2020), and OEM’s are applying rates and incentives to each in different ways. This adds a level of complexity in the offer structures for both dealers and consumers.

Here are examples of how the triage of model years are being handled:

• 2018 models (4.1% of July retail sales) are transitioning to final pay incentives—direct to dealer—allowing more discounts on the transaction. We also see attention-grabbing, advertising-driven offers such as “22% off MSRP” on Buick Regal Sportbacks.

• 2019 models (90.4% of July retail sales) have a wide variety of VIN-level incentives, package/option code discounts, special APR offers and regional incentives. This variety of incentives are marketing tools for inventory reduction. For example, GM is now offering a 60-month lease on select models in select markets.

• 2020 models (5.4% of July retail sales) typically have far fewer programs being used at this point in the year, however, the trend is toward broad-brush, general incentives with more emphasis on vehicle attributes and option packages.

The majority of incentives currently active are focused on model year 2019 product which dealers and OEMs need to move to replace with 2020 models. Heavy emphasis from OEMs are on regional discounts to help address inventory glut or use increased discounts on specific model/trim combinations to win payment battles for market-share gain. This is the height of price and payment competitiveness to close out the 2019 model year inventory and a great time for consumers to get great deals.

Auto makers are also working closely with their dealers to maximize attributes and option packages that customers value (i.e., infotainment/navigation, heated/cooled seats, adaptive cruise control, power lift gates, second-row captain’s seats, etc.). These packages are built by the OEMs at a relatively low cost and can be used as a discount with minimal effect on profitability. These special package incentives result in far less margin compression compared with traditional offers such as discounted APR, bonus cash or special lease rates.

The U.S. auto market continues to be hypercompetitive, which is driving the large volume of unique rates and incentive programs. Incentive volume was high in September, even without a Labor Day weekend. As this is “sell down season” and with the industry working through a lengthy GM strike, the chances of incentive volumes being reduced is very low. We expect to see an increase of program offers to earn consumers who are in the market for a great product looking for end-of-year discounts. 

What’s not to like about buying a vehicle this time of year?

*This article was originally posted to the Cox Automotive newsroom. How will new-car dealers and their manufacturing partners reduce bloated inventory on dealer lots? We’ll get a hint this coming weekend, as the Labor Day holiday puts focus on the trifecta of new-vehicle incentive strategies for clearing lots of older models. Right now, dealers are juggling 2018 (reported to be 3.5% of new-vehicle sales last month), 2019 and 2020 models in inventory.   
The U.S. economy continues to show strength, but auto sales are under pressure due to affordability issues, a general saturation point with new-vehicle sales, and an influx of off-lease, nearly-new products that are particularly attractive to price-conscious shoppers. Vehicle inventories have been rising (see more at https://www.coxautoinc.com/market-insights/inventories-rise-automakers-cut-production/) and that’s leading to new incentives to keep sales flowing.   
The volume of new-vehicle incentive programs available remains at record levels due in part to how the automakers are allocating incentive spend for targeted offers on aged inventory, slow-selling product and poorly-equipped vehicles. We’re seeing more incentive offers assigned at VIN-specific levels, using “tagged cash” and “percent off,” along with more APR offers from the captive finance companies taking advantage of recent Fed interest rate reductions. 
There are generally three tactics associated with the way incentives are being used to help drive inventory turns and sustain a desirable pace of new-vehicle sales.

• Tactic #1: Stimulate – These are Tier I/II-advertised specials designed to cast a broad net and engage casual shoppers. Essentially, these incentives are “advertising” incentives and traffic drivers, often 0% APR or 20% off MSRP, and are designed to spike interest in a given brand or specific vehicles that are old inventory or in low demand. 
 
• Tactic #2: Manipulate – These incentives include many special APRs and cash offers available to make the deal even more attractive and turn active, on-the-lot shoppers into buyers. Manipulate-type incentives are often “bail out” incentives on specific, must-move vehicles, e.g. 2018 models languishing on the lots.  
 
• Tactic #3: Motivate – The best dealers are tuned in to local market sales metrics for stocking, promoting and incentivizing high-demand, new vehicles. These smart incentives help keep the inventory moving, which is more important than ever as the math for floor plan carrying costs has changed significantly in the past few years. (See chart above from “Investment Minded New Car Inventory Management,” a Digital Dealer 27 presentation given by Brian Finkelmeyer, senior director of Conquest at vAuto. His presentation is available for download at the end of this blog.)  

(Higher interest rates are directly impacting dealer profitability as aged inventory is significantly more expensive to hold. More than ever, dealers must be focused on the right incentives strategies to keep aged inventory in check.)   
 
The long Labor Day weekend is an important milestone in any sales year. If sales are strong, we will be on course for a healthy, profitable fourth quarter. If sales come in weak, we will be watching for even more incentives and special offers to help move old inventory and make room for fresh 2020 vehicles.  
Smart incentive strategies and production cuts by the automakers are helping prepare the industry for a lower SAAR, forecast by Cox Automotive to be 16.8 million in 2019, down from 17.3 million last year. Still, dealers need to maintain lean and desirable dealer inventory levels by embracing a higher discipline in new-vehicle stocking with a healthy dose of smart pricing and payment tactics. 
Brad Korner is general manager of Cox Automotive Rates & Incentives. The Cox Automotive Rates & Incentives (CAR&I) team has developed a methodology for measuring the accuracy of data used to calculate pricing and payment information presented through dealer service provider tools (e.g., dealer websites, inventory management, digital retailing & advertising, desking, equity, etc.). Approximately 17,500 individual dealerships – rooftops, in automotive parlance – in the U.S. rely on CAR&I incentive data for powering 5 different software applications through Cox Automotive native software/sites and our many industry partners. In all, an estimated 87,000 applications are relying on CAR&I data in a given month, providing valuable information to 40 million shoppers

July 2019 is expected to be officially the hottest month in history, temperature wise. The same might be said for the level of sales incentives offered by the automakers. This time of year, we often see a slowdown in the number of incentives available, as model year changeovers and strong spring sales have dwindled vehicle supply on dealer lots.

That was not the case last month. (See chart below). The volume of unique incentive programs ran high in July 2019, as they have all year with the OEMs battling a trifecta of challenges impacting new–vehicle sales:

1. Stubbornly high interest rates are driving higher payments for new–vehicle buyers.
2. Increased content is pushing the Manufacturer’s Suggest Retail Price (MSRP) higher. The average MSRP through the first half of 2019 is north of $39,500, according to our Kelley Blue Book data team.
3. There’s a large surplus of “nearly new” vehicles on dealer lots serving as smart alternatives to a new, zero-mileage vehicles.  

Our team watches incentives carefully each month, to help both consumers and dealers calculate accurate price and payment data for new cars. In the past few years, we’ve seen the automotive manufacturers become increasingly strategic with their incentive disbursements, offering incentive programs at the VIN, option package/code and geographic levels. We’re also seeing numerous competitive offers, which helps retailers manage monthly payments and financing offers to meet the needs of buyers struggling with the affordability of new vehicles.

All these factors are pushing higher the raw number of incentive programs in the market today. More programs mean more deals, so new-car buyers need to make certain they are receiving all available incentives. And it is worth noting, not all buyers are eligible of all special rates or incentives, so it pays to ask and do the research.

But just like sweltering July heat, incentive volume could cool off quickly, although chances are we won’t see a slow down until inventory levels drop another 10%. Pending July sales, the program count may stay hot into August.

Note: Chart shows total volume of unique incentive programs, across all makers. This number does not indicate value of the programs, only volume. For example, in July 2019, Toyota carried 137 unique incentive programs, Nissan had 252 and Honda 68. Ford, conversely, which typically carries numerous regional and national programs across its vast line of vehicles, had 597 different incentive programs in play across the country. In total, there were 2,923 unique programs available in July 2019, up from 2,664 last month and up from 2,307 in July 2018.

                           Optimizing Advertising Promotions Using Rebates & Incentives

Improving response and ROI for advertising investments while gaining consumer trust and brand equity

New vehicle sales continue to be dependent on a combination of multi-channel advertised specials, rebates and incentives promotions. These offers (i.e., buy this vehicle for $349 a month, 1.9 percent financing and $5,000 off MSRP) play a prominent role in enticing consumers to purchase their next vehicle.

Kelley Blue Book’s recent Leasing and Incentives Study, however, shows that over 70 percent of consumers have only some to no knowledge of incentives. The same research reveals a $2,500 offer motivates shoppers to move from buying within months to purchasing within a week. What’s more, over 90 percent of consumers are shopping for a vehicle online.

Leveraging these OEM offers across all advertising tiers is an effective promotional tactic for motivating consumers to purchase. Making incentive and specials information easily accessible across all marketing and advertising channels can improve shopping traffic and engagement for dealers and dealer service providers (DSPs).

A key foundation for improving response rates is to promote and use the same incentives and messaging across the entire shopping landscape. Consumers who see the same offers through multiple shopping channels (i.e., paid search, display ads, third party listings/dealer websites, price and payment tools online and in-store) are motivated by trust in the offer consistency. This allows dealers (through DSPs) to align with national advertising efforts, creating additional value through all marketing and advertising campaigns which reflect OEM-driven offers.

Research conducted by Cox Automotive Rates & Incentives (CAR&I) analyzed the accuracy of data used for calculating pricing and payment information presented through DSP tools. In the study, CAR&I compared APRs, cash and conditional incentives through these various tools for seven new vehicles in the East Coast and West Coast markets. The analysis looked at data from three competitive incentive providers, including CAR&I.

The study found significant variations across the three providers, ranging from $0 to $6,750 in pricing for the same vehicle, resulting in monthly payment fluctuations of up to $122 per month for 60 months. The analysis also showed that both unnamed vendors incorrectly applied incentives for two vehicles, resulting in $500 to $750 in overstated incentives applied, costing dealers valuable margin.

These disparities have wide-ranging consequences for dealers, including loss of credibility in pricing and loss of profits on transactions. It’s not just that consumers might walk away from one purchase; it can affect repeat purchases and referrals too. Rebate and incentive information must be accurate for advertising and marketing to effectively build trust and transparency while improving the customer experience.

The use of rebates and incentives for advertising across Tiers I – III creates a consistent, credible message that supports a customer experience while driving brand equity and buyer loyalty. With dealers paying from $.50 to $20 + per VDP visit according to Generations Digital (https://www.generationsdigital.com/), choosing the correct data partner for a single source of accurate and complete rebates and incentives leads to improved response rates, increased lead conversion and greater profitability. 

Brad Korner is general manager of Cox Automotive Rates & Incentives.

Our world is crowded with marketing messages about what to buy and why.  As consumers we shop multiple places to make sure we’re receiving the best deal and that the offers we are being presented are consistent, valid and apply to our specific needs. 

The world of automobile shopping has taken this ubiquitous shopping experience to a new level with multi-channel advertising, paid search, auto research/listing sites, tiers 1 – 3 websites and many on line pricing tools.  There are so many tools at our disposal that getting pricing has never been easier.  Since consumers cross shopping sites, it is more important than ever for the auto retail industry to have consistent pricing across all tiers.

Technology now allows OEM’s, dealers and advertising agencies to apply incentives to a price configuration for customized transactions that meet a consumer’s budget.  The accuracy, consistency, speed and comprehensiveness of this information is the difference in converting shoppers to buyers for auto retailers that advertise on multiple digital properties.

The openness of information for consumers fosters candor and trust that are like a carrot as opposed to a stick method of engagement.  Studies support this approach which has seen rapid adoption by dealers, shopping sites, finance companies and OEM’s.  This is a more specific application of the offers available on public domains and presented through omnichannel communication (traditional, digital & social) with specific inventory or advertised specials from OEM’s.

Our clients are seeing a collaborative effort by the industry (OEM’s, dealers, ad agencies, software providers, lenders, etc.) to present consistent information for targeting shoppers and their position in the purchasing process.  Use cases have surfaced about how this information is being applied as a competitive pricing/feature analysis of brand/makes, influencing the transaction (price and financing), qualifying requirements (credit score, eligibility, used vehicle trade value . . .) and the strategy of using incentives as part of a payment lowering for winning market share battles.  These examples have tactical value and will continue to help us with analytics for improved spending and ROI from inventive investments.

Analytics will continue to drive where and how incentives will be applied for achieving both volume and margin requirements.  Transitioning incentives from “showroom traffic drivers” to strategic discounts for payment conscious shoppers looking for the right vehicle at an affordable cost is an example of moving incentive use further down the funnel to a transactional level.  This dynamic will continue to drive the collaboration between all players in the industry for providing guidance on the sales effectiveness of incentives based on their targeted intent.

These areas are key to dealer and OEM profitability which is under attack because of margin compression at many levels.  Initiating a new car sales strategy by maximizing inventory, advertising/marketing and inventory turn (see Brian Finkelmeyer’s post https://www.linkedin.com/feed/update/urn:li:activity:6443198218871332864/) shows the many ways factory incentives support all facets of new vehicle pricing, advertising, marketing, digital retailing transacting and data base mining (equity).  Incentives are not a one trick pony used for driving showroom traffic, rather a key component in 100% of all new vehicle promotion and sales.