Which Cars Offer the Largest Rebates?

The car industry is one of the most competitive in the world. In most other markets, there's usually one or two companies that sell the majority of the products within that industry. Not so in the car market.

The top car brands only hold about a 10% market share and there's always fierce competition trying to strive for the #1 sales position in each car segment. In an environment like this, car makers often resort to offering incentives to help stay on top of the competition.

Car incentives have been around since the 1970s and they sure look like they're here to stay. Most incentives are used to help move slow-selling cars off the lots, but sometimes they're used to keep market share against competitors that are also offering incentives.

The best kind of incentives are cash back rebates, and the largest ones are reserved for cars that take a long time to sell. Most manufacturers and dealers like to have about 50 days worth of inventory available on the lots. This gives car shoppers ample inventory to choose their desired colors and options.

When inventory levels go higher than this, manufacturers will usually start offering some sort of incentive. Cars that have over 125 days worth of inventory will usually have the largest rebates.

I've seen inventory levels on some vehicles as high as 400 days, which means it would take over a year just to sell all the cars on the lots. Inventory levels this high are rare, but it does happen from time to time - usually when manufacturers launch models that don't have any consumer interest, or in situations where a segment that used to be hot no longer is. (Example: large trucks and SUVs after gas prices go up).

Other times you'll find large rebates is when a newly redesigned model comes out and dealers want to move the leftover models to make room for the new ones. I've seen cash back rebates as high as $6,000 in situations like this.

Another time to look for large rebates is when a manufacturer discontinues a brand, such as when GM discontinued Oldsmobile and Ford discontinued Mercury. The leftover models are seen as less desirable and take a hit on residual values. But if you intend to keep a discontinued model for a long time, these can be great buying opportunities.