Online shopping for a new vehicle is growing. Perhaps the single greatest piece of advice is that when a manufacturer’s website asks for your ZIP code, give it.
While there are legitimate privacy concerns in giving out personal data, the ZIP code is a key to unlocking significant savings. Nearly all automakers offer regional retail rebates that vary by metropolitan area or region. Gone are the days when a TV or magazine ad identified all the incentives. Simply, a shopper should not go looking for a new vehicle until they’ve researched all the retail rebates available.
“The car market today is extremely competitive so dealers and automakers may think nationally but they act locally,” said Brad Korner, general manager of Cox Automotive Rates & Incentives, a sister division of Kelly Blue Book. “They are very strategic with incentives – putting money where they feel it is necessary to move inventory. The ZIP code helps determine any local or regional incentives that may be available to consumers.”
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No longer one-size-fits-all
Years ago, national rebates ruled the auto industry. For example, a $1,500 rebate on a Ford F-150 pickup would be available in San Diego, Peoria and Portland. (pick your state). That was it, generally speaking. But the industry no longer favors a one-size-fits-all approach. Instead, the new strategy factors in local inventory levels along with competitive conditions. A regional incentive might be triggered even if an automaker’s sales are doing well. The automaker might figure this is the perfect time to grab localized market share from a competitor.
Another approach are targeted incentives on models, like all-wheel drive vehicles in Sunbelt states or convertibles in the Snowbelt, that fail to sell at the same rate elsewhere in the country.
“Lately, we’ve even seen incentives applied to individual vehicle identification numbers. So a specific, slow-to-move vehicle may have some incentive in place to help it sell,” Korner said.
Then there’s another variable when shopping for a new car or truck that the industry calls a conditional rebate. This manufacturer-to-dealer cash on a specific model or models is not publicized to the public. The amount also varies by metropolitan area or state. The dealer has the option of giving the buyer the entire amount of the conditional cash to sweeten the deal, a portion of it, or none at all. The amount of this rebate can be significant.
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Differences are real
For example, a recent analysis by Cox Automotive Rates & Incentives of the retail and conditional incentives in different ZIP codes revealed as much as a $4,000 difference in incentives for the same Ram 1500 Tradesman Crewcab Diesel Pickup. In Detroit, total guaranteed cash totals $8,750 with an additional $4,250 conditional cash including a $3,000 vehicle identification number (VIN) spiff for a total rebate of $13,000.
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In Los Angeles, the same truck comes with $11,250 in guaranteed cash along with $4,250 in bonus cash for a total discount of $15,500. The biggest savings come in Seattle, where the regional rebates total $12,750. Along with the conditional cash of $4,250, total savings are $17,000.
Buyers should always ask if there is a manufacturer-to-dealer rebate on the vehicle being shopped or on other models offered by that brand. Also check your eligibility for other specific rebates available to active military service members, veterans, first responders, and recent graduates.
You have to buy local for local savings
Even though there are no restrictions the ZIP code you enter on a manufacturer’s website, a buyer cannot shop the country for the best deal sweetened by the highest retail and conditional incentives. These programs are based on where the vehicle will be registered. An automaker will not give a Des Moines resident the same retail and conditional incentives offered to Chicagoans, for example. The intent is to protect the dealer network from buyers who might search the country for the best deals.
