You have a good handle on what to do. Follow this roadmap on your Volvo deal.
Volvo’s go-to-market strategy is a little different than most car makers. Volvo’s lease program features direct-to-dealer incentives - the kind of incentives that give buyers the impression that the dealer is giving them a huge discount. The buyer is in fact getting a welcomed discount but it’s not all coming from the dealer. Confused? Good - confusion gives the car dealers the upper hand. Often, dealers are not forthcoming about how they come to the discount they offer you. If you want a great deal - you must break-down the dealer’s total discount into its parts and know how each component contributes to a great deal.
The challenge with direct-to-dealer incentives is it masks the discount you are getting from the dealer and the discount you are getting straight from Volvo. When you get an offer from an Volvo dealer you need to break down the discount your getting into two parts: i. how much is the dealer discounting the price and ii. how much is Volvo discounting the price.
i. Dealer Discount: the dealer should reach into his pocket and give you a discount - this comes from the dealer’s potential profit on your deal. Unfortunately, this is the win-lose part of the leasing game.
ii. Direct-to-Dealer Incentive. Each month Volvo gives dealers funds to discount the price of new cars. This varies by model and it varies by trims within a model. You can find this information on Edmunds (other trunk money is not made public). Dealers may consider withholding some of the incentive from you to improve their deal profit. Your goal is to know it’s there and reflect it ALL in your selling price offer - plus the discount you want from the dealer.
How to use the LH calculator:
- Selling Price input. You only input the dealer discount here. MSRP minus DEALER DISCOUNT. Do NOT input msrp minus dealer discount minus direct-to-dealer incentive here.
- Untaxed Incentive input: This where you reflect the direct-to-dealer discount.
- Taxed Incentives input: This is where you reflect your direct-to-consumer incentives: loyalty, conquest, college grad, etc.
Plug figures used to illustrate how to break down your price & incentives.
$40,000 MSRP
$ 3,000 Dealer Discount
$37,000 Pre-Incentive Selling Price ► Selling Price input into calculator
$ 6,000 Direct-to-Dealer Cash ► Untaxed Incentive input into calculator
$31,000 Dealer’s Selling Price Offer
$ 1,000 Loyalty Cash
$ 750 Healthcare Worker
$ 1,750 Total Direct-to-Consumer ► Taxed Incentive input into calculator