Car manufacturers are increasing incentives to allay buyers' concerns about health and the economy.

Car manufacturers are now seeing the need for incentives to help build the confidence of the active buyer in the buying process. As Brad Korner, general manager of rates and incentives at Cox Automotive, the parent company of Kelley Blue Book, recently noted: "It's been a long time since the automotive world has relied on incentives much. "based on needs".

It's not about the money

In this scenario, the industry seeks to reassure buyers that, regardless of their circumstances, assistance will be available in the form of deferred or canceled payments and financing as low as 0% for extended periods of time. . In addition, they are working on non-monetary incentives that have value in streamlining the purchasing process.

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Starting in mid-March, Korner tells us, automakers and dealers have started creating this collection of new incentive strategies to help keep the fragile industry afloat – incentives you will want. consider if you are targeting the market. of a vehicle. Here is a brief summary of the current incentive options you will want to research:

Transaction incentives

These are the traditional incentives that most car buyers already know about. And as unemployment rises and the economy slows, each new car purchase will be approached with a new level of attention. Recent research indicates that price-driven advertising offers and special financial incentives have become more attractive to buyers, while offers focused on specific products and technology attributes have become less important.

In this environment, car manufacturers and their partner dealers have put in place a series of incentives to address accessibility issues: 0% financing for up to 84 months is the new standard, while carryovers and pardons are common. . And these offers do not strictly apply to specific vehicles or models, but are widely offered in all brands. There are also more opportunities to buy and evaluate financing options using captive and third-party lenders (banks and credit unions) from a mobile device or from a computer.

Recent data suggests that 0% offers generate traffic and help close sales. According to the Cox Automotive Industry Insights team, the percentage of vehicles purchased without interest financing increased from 2.6% in January to almost 20% in mid-April. And the survey indicates that 69% of consumers will likely buy a vehicle sooner than expected for the right offer or incentive. In the end, everyone wants a good deal. The good news: in addition to new payment protection and low interest rates, there are still more traditional incentives.

Purchasing incentives

Although there is no cash or special funding to help reduce the purchase price, new purchasing tools make it easier to purchase process. And recently, we can all use a little. These are not offers per se. These digital retail incentives have the value of making the transaction easier and smoother.

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There are many smart online shopping tools out there and many have been updated in the past month. Fiat Chrysler
FCAU
-1.56%

The brands (Jeep, Ram, Dodge, etc.) offer a recently improved online retail experience, which is part of their Drive Forward campaign. Their goal is to offer a true home experience store.

GM
GM
-1.05%

It’s also in this action, with Shop-Click-Drive. And there are many third-party buying portals, like KBB.com's Accelerate My Deal, designed to help consumers understand and negotiate prices and payment ranges online, earlier in the process. Likewise, resellers are now offering pricing and payment tools to help consumers view, participate in and structure transactions from their homes.

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The goal is to ensure price transparency and streamline negotiations, the part of the process that consumers hate the most. More than ever, easy and intuitive buying experiences are an important incentive that any buyer should want.

Delivery incentives

Delivery incentives are the new kids in the neighborhood: fresh, customer-focused services that quickly become a must. Carvana
CVNA
-6.90%

and Vroom were the first in the home delivery business model. But now, on-demand delivery is available from many dealers, almost out of necessity. Dealer home services by Kelley Blue Book has already been accepted by more than 10,000 dealers. Through this portal, buyers can make video tours, organize trials and organize closing offers and delivery of vehicles without leaving home. These new convenience-oriented incentives help bring the capacity of the dealer directly to the customer, following strong social distancing guidelines. Many dealers offer a free vehicle pickup and delivery service as a benefit of a service appointment.

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This is the new frontier for car manufacturers and dealerships. From senior executives to general managers of dealerships, everyone is rethinking the car buying process. The idea is to add convenience to customers while respecting social distancing guidelines. Those who create the best and most attractive process will certainly have an advantage.

Following?

Today, the tough new market conditions are forcing automakers and dealers to rethink all sales processes. However, we believe that some of these incentives will not last long. Extreme financing – from 0% to 84 months – will not last forever, especially when interest rates rise. More traditional incentives, such as cash back or leases, will begin to overcome the postponement and cancellation of payments as the economy recovers.

But we also suspect that improvements to the online shopping experience will continue, which are new incentives that are currently not in cash. The car buying experience is poised to be turned upside down for much of the decade. The current economic shock forces it to happen.

See all incentives included 0% and deferred payments on KBB.com.