Question

why do car manufactures offer dealer incentives?

Answer 1

Dealer incentives are used for a number of reasons. Sometimes if the new car model comes out a little bit late in the season compared to the competitor's model, a dealer will offer an incentive to pull customers back in to buy the outgoing model. If the market is tough due to recession, interest rates on loans, etc. incentives are offered to get people to buy cars anyway, to bring the prices down. They are often a way to bring customer to Ford who might have gone to Chevy, or even to bring them to Ford dealership "A" instead of Ford dealership "B". Some auto industry specialists watch incentives closely, because they can be a good indicator of how well the industry is doing. Lots of incentives = the industry may be struggling.

Answer 2

I think that the important thing for car buys (like most of us) is the understand the total price of the vehicle, not just the incentive, or the interest rate, or the monthly payment, but how much, when all of those things are includes, am I really paying for this car. Dealers often try to make it hard for you to figure that out ;) but a smart consumer will keep asking until they get the answer.