Why Do Car Manufacturers Offer Dealer Incentives? (5 Reasons Why)

Incentives are a great way to let dealerships know that your product is valued, and to make sure that you have enough inventory to meet the needs of your customers.

But why do car manufacturers really offer dealer incentives? Join me in finding out more about dealer’s incentives!

Why Do Car Manufacturers Offer Dealer Incentives?

The main reason that car manufacturers offer incentives to dealerships is because they want their dealerships to be successful, and motivate their salespeople to sell as many cars as possible. In addition, car manufacturers want their vehicles sold quickly and at a good price, so they offer incentives to help make it happen. Also, it is the manufacturer’s way of promoting their reputation to car dealers.

Learn more about why car manufacturers offer dealer incentives. Here are five reasons why. Read on to discover what I found out!

1. To Motivate Dealers

One reason that car manufacturers offer incentives is because they don’t want dealers who aren’t trying hard enough. 

Since there are many ways in which a dealership can lose money on a vehicle sale. 

From bad deals with customers or suppliers, to damaged vehicles or parts shortages, to missing out on deposits from customers who cancel after seeing how much the vehicle costs. 

Of course, these kinds of issues can lead to losses for the dealership, but if the dealership has been offered an incentive by the manufacturer.

Then they will take steps within their control (like offering discounts on future repairs) in order to prevent these issues from happening again in the future.

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2. To Keep The Relationship Between Manufacturer And Dealer Strong And Close

It gives people a reason to work together with each other; sometimes it’s easier for people who aren’t competitors (like dealers). 

It will help them get along when they’re working together on something that benefits both parties equally. Also, it builds relationships between dealerships and manufacturers. 

Of course, it will help them stay loyal and have loyal customers over time by helping them understand what makes each of their businesses unique from one another.

3. To Improve Reputation With Their Dealers

To Improve Reputation With Their Dealers

The reason car manufacturers offer dealer incentives is because they want to improve their reputation with their dealers.

For example, if you’re a new car manufacturer and you want to make sure that your customers feel like they’re getting a great deal when they buy from you. 

Of course, offering dealer incentives is an easy way to show them that you care about helping them get the best price possible for their purchase. 

It’s a simple concept: if you give dealers incentives, they’ll be more likely to trust you and sell more cars. 

And if they trust you, they’ll be more likely to recommend you to their friends and family—and those referrals will increase your sales even more.

4. To Keep Track Of How Much They’re Spending On Each Car

When a manufacturer wants to increase the sales of their vehicles, the first thing they do is look at the price of their cars and if it is competitive enough or not. 

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If the price is not competitive enough then they will have to lower it in order to make sure that people buy their cars but if they are too expensive then people will not be able to afford them. 

This is where dealer incentives come into play because it helps manufacturers get more sales by offering discounts on the price of their vehicles which will allow people who cannot afford these cars to be able to purchase one.

Further, dealer incentives are also offered as a way for manufacturers to attract new customers and keep existing ones loyal. 

It is made possible by offering them special deals such as free gas cards or gift cards for use in their stores which makes buying new cars faster and easier for consumers. 

5. Manufacturers Want To Make Sure That The Dealerships Can Sustain A Profit

Car manufacturers want to make sure that the dealerships can sustain a profit, and giving them incentives is a way to do that. Car dealerships are expensive to maintain.

Dealerships might lose their cars if they don’t sell enough cars to cover their costs of maintaining the showroom. 

Manufacturers want them to sell more cars so they can keep earning money from renewal fees. Manufacturers want dealerships to stay in business because it helps them sell new models. 

If dealers can’t afford to keep their existing inventory on hand, they won’t be able to buy new models and sell them quickly enough when they launch.

Of course, manufacturers also need dealerships around so they can make sure they’re working with them on new products as soon as possible after a new model launches.

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To know more, you can also read our posts on why wax is good for cars, why Alfa Romeos are so cheap, and why Toyota stopped making the FJ Cruiser.


Dealers offer incentives to attract new buyers and because they can usually turn around and make more money on the vehicle through markup. 

Also, manufacturers offer incentives because they have to compete with other manufacturers and want to get high volume sales. 

And the best way to take advantage of incentives is to shop around for the best possible price for your next vehicle.

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