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How to Buy a New Car for Below Dealer Cost

May 24, 2012

Cash back rebates may not be as large as they were last year, but certain car manufacturers are offering something much better: hidden "stair-step" incentives. These incentives offer dealers escalating bonuses if they hit certain sales targets, and offer consumers the opportunity to purchase new cars for below dealer cost.

Car manufacturers prefer giving these "hidden" incentives because it helps prevent damage to the brand's image, and helps keep resale values higher than they otherwise would be.

In recent months, stair-step incentives have been implemented by the following manufacturers: Honda, GM, Chrysler and Nissan.

In an effort to cash in on these bonuses, some dealers are willing to gamble and sell cars for up to $2,000 below cost in hopes of hitting their sales targets. Here's a quote from Automotive News describing the situation - "Dealers gunning for their sales bogeys in the final days of a program often slash prices well below cost - willing to sustain, say, $30,000 in losses in hopes of a $100,000 volume-based bonus at the end - and drag down other dealers' prices in the process".

If you're willing to comparison shop and get price bids from multiple dealers - especially near the end of the month, you stand a great chance of buying a car for below dealer cost.

I recommend you start with the free CarWoo Deal Finder which allows you to get multiple price bids without having to visit dealers.

The Hidden Bonuses

Here's a sampling of what's currently being offered: GM is offering dealers $100 to $750 in bonuses for each vehicle they sell above a certain threshold. The models eligible for the bonuses include the Chevrolet Cruze, Malibu, Equinox, Traverse, and Silverado, plus all Buick models.

Honda, in an effort to clear 2012 models off the lots is offering $100 to $500 in bonuses on the Accord.

Chrysler is offering $200 to $600 for each vehicle sold once the dealers hit a certain sales threshold.

Nissan is paying dealers $200 to $800 per vehicle for reaching three different sales goals.

Use the free CarWoo Deal Finder to take advantage of these hidden incentive opportunities.

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My Top Recommended Tools for Car Shoppers


TrueCar and Edmunds Price Promise are the quickest way to see the lowest prices available on new cars in your area. Both tools provide upfront prices from local dealers, and the deals are usually really good. It should be the first step you take when negotiating car prices. You should follow that up with my checklist to make sure you get the best possible deal.
- Gregg Fidan

Gregg Fidan

About: Gregg Fidan


Gregg Fidan + is the founder of RealCarTips. After being ripped off on his first car purchase, he devoted several years to figuring out the best ways to avoid scams and negotiate the best car deals. He has written hundreds of articles on the subject of car buying and taught thousands of car shoppers how to get the best deals.

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