Presumably, General Motors Co.’s (NYSE: GM) Chevy division wants to clear out a portion of its 2015 Silverado inventory. It makes sense, since the company already has 2016 models in dealerships. The discounts on several models are hefty, particularly the 2015 Silverado 1500 Crew Cab All Star 4WD model, which has a set of discounts which among them total as much as $9,750.
Chevy breaks down the individual components of the discount this way: $4,000 total allowance, $2,000 trade assistance, $3,000 factory reduction below MSRP and a $750 option package discount. To make the incentive package more complex, the total of $9,750 is only available for buyers who trade in an eligible vehicle, a condition that comes with an asterisk.
The $9,750 discount is telling in two ways. One is that dealers and manufacturers do what they can to cut “time on lot” or “days to turn,” which are measurements of how long a dealer holds an individual model in inventory. Holding cars month after month becomes expensive. Presumably 2015 models are harder to sell in a market in which 2016 vehicles receive most of Chevy marketing push.
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Also telling is that the $9,750 discount is a bit of a tease. The number of qualifications for this particular deal are so high that they can only apply to a small part of Silverado inventory. However, the promotion catches the eyes of many potential buyers who eventually buy a less discounted Silverado. The $9,750 discount has gotten their attention and brought them in the door.
At $9,750, it is hard to say how Chevy and its dealers make money, but that may not be their primary goal.
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