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Even Saturn embraced incentives.... Posted by Mike Lynch [Email]  (#81) [Profile/Gallery]
(more from Mike Lynch) on Tue, 27 May 2003 11:33:32
In Reply to: Incentives Bother Foreign Auto Makers, Nick Collison, Tue, 27 May 2003 06:40:32 Members do not see ads below this line. - Help Keep This Site Online - Signup |
A realistic, accurate assesment of your position in the market will indicate the likelyhood of a manufaturer resorting to incentive based selling. The big dogs need less of that than the also rans. An example that comes to mind is Toyota and Honda use incentives sparingly. Mitsubishi always has incentives and deferred payments. BMW and Mercedes do a lot less incentive selling than Volvo, Audi and Saab.
The automotive selling experiment of the 90's, Saturn the one price no hassle no haggle consulative selling backed up by a 30 day moneyback guarantee, has embraced incentive based selling. Again a realistic evaluation of their position in the market indicated this. They're underdogs compared to Honda Toyota.
And incentive based selling works. I've seen Saab masterfully manipulate the incentives to clear up excess inventory. To some extent everything has it's price point. Saab has to be in the ballpark at the window list and have a clear advantage after incentives.
One of the premises of not using incentive based selling is resale value. That if you pay all the money for a car when it's new you'll get that premium back when you resell it. That depreciation is the biggest expense in vehicle ownership and that you can enjoy a more expensive car because you'll receive that value back upon trade or resale time.
The other side of that pancake is that even a car that touts it's premium resale value still has massive depreciation. True the rate of depreciation may be slightly less, but the total dollar depreciation may not make up the initial price premium, particularly when you compare those values with the actual selling prices vs. the sticker price as when you got $9k off your Viggen list.
posted by 207.158.49...
, Tue, 27 May 2003 11:33:32 <-- Viewing This Message, Tue, 27 May 2003 12:44:21
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