With constant production delays and record used car prices becoming the new norm, we are seeing more and more automakers promoting price protection programs to help combat the current high demand conditions on the market. automotive market.
Sharp price increases can control demand to some degree, but they can also create problems for low-income customers who are being sold a new or Certified Pre-Owned vehicle and may not have a viable alternative for commuting to work or around town. So wWe’ve rounded up the brands that have price protection programs in place and explained how they work. Here’s what you need to know.
How does price protection work?
Throughout a normal model year, vehicles will enjoy incremental MSRP increases. Usually these increases are in small increments of up to 3%, but with the combined incidents of the global chip shortage and a 40 year high rate of inflation, these increments have increased dramatically, on some models, with new MSRPs exceeding more than 10%. % on time.
To this end, some manufacturers allow buyers to place a retail order with their dealership for a vehicle that is not currently in stock. Most price protection policies state that the vehicle ordered must either be in transit or simply assigned to the dealership.
Once a retail order is registered, it is converted into a sold order and submitted to the captive lender. Since retail orders often have lead times of several months, the promotional rate or incentive at the time of ordering will likely have expired by the time the vehicle is delivered.
Depending on the manufacturer, these sold orders may be eligible for price protection. This will generally result in a credit issued by the customer, the amount of which corresponds to the difference between the new price and the price at the time of the order.
Alternatively, some brands offer incentive protection. This means that customers with qualifying sold orders may have the option of choosing between the promotional incentive at the time of ordering or at the time of delivery, whichever is more favorable to the customer. Incentives could be a promotional discount or a low lease or finance rate.
Car brands offering price protection
With the current state of the auto market, more automakers are offering price protection incentives or making programs available to their customers to help make buying a new car a little fairer. in these unprecedented times. Here’s a look at how some brands are tackling this practice.
Audi offers an MSRP Lock program on the purchase, lease or finance of a specific new vehicle with the 2022 VIN that has experienced a price increase since the end of a specified promotional program. This program requires an Audi dealership to submit a signed digital consent request at the time of ordering. Customer shall receive 100% discount of MSRP difference.
BMWs and MINIs increased the duration of its Credit Lock program from 90 days to 120 days. New and Certified Pre-Owned and Regional Rate Sales Support approvals funded with BMW Financial Services after December 1, 2021 and April 1, 2022, respectively, will be locked at the current rate until 120 days after the end of a promotional program.
FCA The Price Protection Policy states that the buyer must sign and date an order detailing the agreed selling price of the vehicle. Vehicle must be ordered new and for immediate production or selected from dealer stock orders not yet invoiced. Eligible brands include Alfa Romeo, Chrysler, Dodge, Fiat, Jeep, RAM and others.
After production, the vehicle will be delivered to the dealership. From there, the vehicle must be delivered within 14 days to the original customer. Although a deposit is not required, the manufacturer recommends it, so be prepared for the dealer to ask for one. You can refuse if you wish.
Incentive protection is also an option with FCA retail orders. FCA allows the customer to choose between the expired incentive or the current one, in case it is more beneficial. A deposit is also not required.
Fords and Lincolns In-transit stock order price protection includes new incoming 2022 vehicles. Dealer must submit customer registration for retail order to Ford captive lender between the time a vehicle obtains its VIN and the date of delivery from the dealership. Ford makes price protection available in situations where a price change occurs from the time of customer registration until the vehicle is invoiced.
Ford and Lincoln also offer incentive protection, which differs from price protection in that it allows a customer to take advantage of a promotional incentive that was valid at the time of the retail order but expired before the vehicle can be delivered.
Ford and Lincoln are also offering a $1,000 bonus Retail Order Bonus to entice customers to place a factory order and wait for delivery, which can take several months. Separately, instead of the retail order bonus, Lincoln gives customers the option to Retail Order Special APRwhich can mean rates as low as 0% APR for 60 months.
GMit is The Price Protection Program applies to most 2021, 2022 and 2023 models, including certain performance cars and commercial fleet vehicles. The vehicle’s production date must be on or after the effective date of the price increase. Dealer must submit the sell order to GM within one business day of the price increase. The vehicle must be delivered immediately to the same customer who placed the order. Eligible brands include Buick, Cadillac, Chevy and GMC.
Instead of price protection, GM customers may have the option of taking advantage of incentive protection. However, only incoming non-performance vehicles of the 2021 and 2022 model years are eligible. For customers financing at standard rates, an incentive aid in the form of a credit will be issued if a promotional incentive proves to be inferior at the time of delivery.
Honda will honor contracts up to 10 days after the expiration of the rate, provided the request for credit is received by Honda Financial Services on or before the expiration date of the rate. Only new 2021 models under 6,000 miles are eligible for Price Protection. Vehicles ordered must be sold to the originally registered customer.
INFINITI offers retail incentive holdback on leases and promotional finance rates for new cars only. New cars financed at standard rates are not eligible for this program. At the time of delivery, the INFINITI dealer will have the option of applying the incentive holdback or current promotional offers, whichever is most favorable to the customer.
Are price protection programs worth it?
According to our analysis, yes, these programs are definitely worth it. Automakers have had a taste of what it’s like to operate with limited inventory during the coronavirus pandemic and ensuing supply chain issues, with some considering moving to a take-order business model. retail by stocking fewer configurations at dealerships.
That said, manufacturers run through promotional programs faster than they deliver vehicles. Some automakers are even considering capping incentives and intentionally keeping inventory levels low. Simply put, Price Protection Programs will help customers get the best deal on new and Certified Pre-Owned vehicles that are not currently in stock and have the potential to promote customer satisfaction and brand loyalty. .
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