Dealer Incentive

AAA

DEFINITION of 'Dealer Incentive'

A corporate sales strategy in which the price a dealer has to pay a manufacturer for a particular product is reduced, allowing the dealer to make a higher profit or to reduce the price at which the product is sold to consumers. Dealer incentives can be tied to certain sales quotas, meaning that the dealer will only receive the incentive when a certain number of units is sold.

BREAKING DOWN 'Dealer Incentive'

Dealer incentives are often associated with the automobile industry. Manufacturers will reduce the price a dealer has to pay for a particular vehicle model in the hope of increasing the sales volume of that model. If the dealer charges the end consumer the same price but pays less to acquire the model, then the dealer earns a higher profit. The dealer can also pass the cost savings to the consumer, but may not be required to do so.

RELATED TERMS
  1. Dealer

    A person or firm in the business of buying and selling securities ...
  2. Dealer Financing

    Loans that are originated by a retailer to its customers and ...
  3. Auto Sales

    The major producers of domestic automobiles report sales monthly. ...
  4. Big Three

    A reference to the three largest automobile manufacturers in ...
  5. Retail Sales

    An aggregated measure of the sales of retail goods over a stated ...
  6. Passive Income

    Earnings an individual derives from a rental property, limited ...
Related Articles
  1. Personal Finance

    Top 10 Ways To Get Top Dollar For Your Car

    Find out what steps you can take to reduce the depreciation of your vehicle.
  2. Personal Finance

    Save On Planes, Trains And Automobiles

    Getting to, and around, your travel destination doesn't need to break the bank.
  3. Options & Futures

    Henry Ford: Industry Mogul And Industrial Innovator

    This man made his dream of bringing the automobile to the masses a reality.
  4. Personal Finance

    12 Ways To Shop Smarter

    The early bird may catch the worm, but in shopping, the worm will come to those who wait.
  5. Fundamental Analysis

    An Inside Look at Pinterest's Business Model

    Learn about Pinterest and the type of company it is trying to become. Understand the company's business model and what makes it unique.
  6. Entrepreneurship

    What's the Purpose of IRS Form 1065?

    Business partners need the information on this form to complete their own tax returns. Here are the details.
  7. Entrepreneurship

    5 Bad Habits Every Entrepreneur Should Avoid

    Learn how to avoid specific bad habits that plague entrepreneurs, such as failure to plan, bad associations and not keeping a good work-life balance.
  8. Stock Analysis

    Salesforce and SAP: Don’t Expect the Same From Both

    Take a look at the similarities and differences between SAP and Salesforce in the customer relationship management (CRM) software marketplace.
  9. Economics

    What's an Irrevocable Letter of Credit?

    An irrevocable letter of credit (ILOC) is a financing vehicle used to facilitate commerce between two parties who are not familiar with one another.
  10. Stock Analysis

    Southwest Airlines: Delta's Worst Enemy?

    Learn about the rivalry between Southwest Airlines and Delta. For decades, Delta was the major operator in the South, but it has been displaced by Southwest.
RELATED FAQS
  1. How are joint ventures regulated in the United States?

    Joint ventures are a very specific type of business arrangement. They can be organized in several different legal structures, ... Read Full Answer >>
  2. How long does it take to execute an M&A deal?

    Even the simplest merger and acquisition (M&A) deals are challenging. It takes a lot for two previously independent enterprises ... Read Full Answer >>
  3. How do a corporation's shareholders influence its Board of Directors?

    The 21st century has seen a rapid increase in shareholder activism, such as the general awareness, involvement and influence ... Read Full Answer >>
  4. What protections are in place for a whistleblower?

    Whistleblowers can play a critical role in ensuring the compliance, safety, honesty and legal fairness of governments and ... Read Full Answer >>
  5. What are some types of financial netting?

    Whenever two parties in any financial relationship square up or consolidate their accounts with one another, it is called ... Read Full Answer >>
  6. Can I buy insurance to reduce unlimited liability in a partnership?

    Partnership insurance is actually quite common. Most of the time, partners buy insurance to safeguard against the possibility ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Bear Market

    A market condition in which the prices of securities are falling, and widespread pessimism causes the negative sentiment ...
  2. Alligator Spread

    An unprofitable spread that occurs as a result of large commissions charged on the transaction, regardless of favorable market ...
  3. Tiger Cub Economies

    The four Southeast Asian economies of Indonesia, Malaysia, the Philippines and Thailand. Tiger cub economy indicates that ...
  4. Gorilla

    A company that dominates an industry without having a complete monopoly. A gorilla firm has large control of the pricing ...
  5. Elephants

    Slang for large institutions that have the funds to make high volumes trades. Due to the large volumes of stock that elephants ...
  6. Widow's Exemption

    In general terms, a widow's exemption refers to the amount that can be deducted from taxable income by a widow, thereby reducing ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!