Are New Car-Buying Incentives Really Worth It?
In the midst of a fuel crisis and a flailing economy, car dealers and manufacturers are offering up a bevy of incentives for the new car buyer. Anywhere we turn these days, consumers are being enticed by a variety of offers and deals on purchasing that new vehicle.
But just how much of a deal is the car buyer really getting? Do these incentives actually benefit you, the consumer, in the long run?
These are difficult questions to answer, and depend greatly on the model you are considering and the incentive in question.
One type of incentive that has garnered a lot of attention in the past few months is the fuel incentive.
Primarily utilized by Chrysler as the basis of its "Let's Refuel America" campaign, this incentive guarantees that buyers can lock into a $2.99 a gallon gasoline price for the next three years. The manufacturer launched this effort in May 2008, after hitting a record low in sales for the previous month.
A new BuyingAdvice.com survey, which drew response from over 2,400 visitors, sought to examine what new car buyers think of the variety of incentives now being offered to them.
In regards to the Chrysler fuel incentive, participants were almost equally divided on the issue. Just more than half (53%) of those polled said they believed that the Chrysler fuel incentive would lead to substantial savings for the consumer.
A few months after its inception, however, most sources report that the incentive plan has not been successful.
After crunching numbers, Consumer Reports has basically pointed out that new car buyers will save more by choosing normal incentives, rather than the gas card. As part of the deal in choosing the gas card, buyers were obligated to forego any other type of incentive.
Many have been quick to point out the flaws with the fuel incentive, and it makes some sense that offering gas at lower prices does very little to reduce fuel consumption. Critics note that the public has been quick to catch on as well, as only 5-10 % of Chrysler buyers have opted to go with the fuel promotion.
When survey respondents were asked to select which type of incentive was generally most beneficial to the consumer, fuel incentives was actually the least popular choice, with only 18% of the vote. The majority of participants selected cash incentives as the most beneficial, and employee pricing incentives ranked second.
Although cash incentives are the most preferred type of incentive, they are not enough to persuade a large segment of new car buyers to purchase a larger vehicle, such as a truck or SUV.
46% of buyers stated that no incentive would persuade them to consider purchasing a larger, less fuel-efficient vehicle. Over half (53%) stated that neither cash, nor fuel incentives would influence their car-buying decision.
In regards to cash incentives, buyers would benefit from being cautious. The fact is that many of these vehicles have big discounts for a reason; they are not selling well, and it is important to consider why.
Published on Wednesday, July 23, 2008 - Email to a friend
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