What is Carryover Allowance?

Carryover allowance is a special incentive given to dealers from the manufacturer to help clear out year-end models.

It usually goes into effect whenever the next year's models start arriving in showrooms. Manufacturers don't want the leftover models competing with the newer ones, so they offer dealers an added bonus to sell them - usually 2 to 4% of the invoice price of the vehicle.

New models usually begin arriving in August and it's common to see end-of-model year clearance sales start to pick up in September/October.

Carryover allowance is an added bonus on top of any other hidden incentives that may be provided by the manufacturer to help clear out slow-selling models. Not all manufacturers provide carryover allowance, and in fact most have replaced them instead with hidden dealer incentives or customer incentives..

If a dealer does get one, they may not pass the incentive to the consumer. It all depends on how quickly the leftover models are selling. When a dealer has no problem clearing out their lots, they're not going to be motivated to pass on the savings.

But it's always good to know these hidden discounts and kickbacks when negotiating, especially if you're trying to buy a leftover model. In most cases, dealers have a lot of room to negotiate. The type of deal you get depends on how well you negotiate coupled with local demand/supply dynamics.