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Will Lack of New Sales Incentives Affect Car Sales Overall?

What really sets one car apart from another? Are incentives, price, or specific features the most important factor for consumers? If it is the incentives, there is a possibility of them drying up for good.If so, will people still buy as often and what will happen with competition between companies? What will drive people’s decisions?

This has become a concern due to the fact that we Canadians may have become addicted to incentives and recently the amounts of incentives are decreasing. Last year alone the average amount of incentives was only 17.2% of the $29,312 purchase at $5,041.

That’s about as rich in real dollars as the average in 2013, when the incentive money represented 17.6 per cent of an average transaction price of $28,259 — or $4,973.58. Thus, for more than two years now, carmakers and their dealers have used $5,000 to lure Canadians to pull the trigger on a new ride.

The incentive money certainly lit a fire under buyers. In 2014, Canadians bought a record 1.85 million new cars and light trucks. That sales boom broke the previous all-time record set in 2013. As J.D. Power put it in a note to clients, “the doldrums of the recession years are clearly in the rear-view mirror, albeit perhaps closer than they appear.”

We’ll call that a cryptic caveat. That is, J.D. Power and auto analyst Dennis DesRosiers of DesRosiers Automotive Consultants both see reasons to be optimistic about what lies ahead for 2015 – but it’s a cautious optimism.

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