How are Federal Clean Vehicle Credits taken into account in the Motor Intelligence incentive spending model?
The Federal Clean Vehicle Credits on eligible electric vehicles only show up in the Motor Intelligence incentive spending model under lease support. The reason for this is that on leased vehicles the credits are given to the bank that the vehicle is being leased through, not the consumer, because the bank technically owns the vehicle. The captive finance company is free to use part, all or none of the credit to help lower the cost of the leased vehicle. Any amount of that credit that they pass along to the consumer in the form of lease cash, lease rate or residual value support is considered to be support in the Motor Intelligence incentive spending model.
What is the Motor Intelligence Promotions (Program) Cost Model?
The U.S. Marketing Promotions Cost Analysis model calculates the differences between standard
or non-incentivized programs and all factory-supported promotions. The incentive variables
included in the model are consumer rebates, discount financing, lease rate subvention, residual
exposure, dealer allowances, volume bonus payments and contests.
Passenger car and light duty truck retail sales are the weights used to average the costs per
model every month.
How is Motor Intelligence's estimated incentive spending calculated on vehicles that are leased through manufacturers' captive finance companies?
The model compares the residuals offered by the manufacturer to the residuals
reported in a standard industry lease guide. The difference between the two is the
amount of lease residual support. Lease rate support is calculated by comparing the
manufacturer/captive lease interest rate with the average commercial bank new car
The main inputs into the Lease Model are:
1. Lease Cash Support: A combination of "consumer lease cash" and "dealer lease cash."
- Consumer Lease Cash is consumer cash that may be used to reduce the capitalized cost of vehicles that are leased through captive finance companies.
- Dealer Lease Cash is dealer cash that is available on vehicles that are leased through the manufacturers’ captive finance companies.
2. Residual Value Support: Residual values are numbers that are published by banks that are used to calculate the depreciation portion of vehicles’ lease payments. They are usually expressed as a percentage of vehicles’ full MSRPs, including destination charges, plus the MSRPs of any options that may be residualized. In the Motor Intelligence model, "residual value support" is the difference between the lease residual value used by a manufacturers' captive finance company for a vehicle and an industry standard lease residual value for the same model. Motor Intelligence uses the lease residual values that are published by the independent organization ALG as the standard residual values in its incentive spending calculations.
How is Motor Intelligence's estimated incentive spending calculated on vehicles paid for with cash or financed through an independent bank?
This model uses the Consumer & Dealer Cash Support at face value.
The main inputs into the Retail Model are:
1. Customer Cash Support: A public-facing cash incentive that is provided on retail sales of a vehicle by the manufacturer that is not compatible with the special retail financing or lease offers.
2. Dealer Cash Support: A retail cash incentive that is provided by a vehicle’s manufacturer to dealers to use as they please. This type of incentive is rarely advertised but paid by the manufacturer to the dealer for every model sold.
How is Motor Intelligence's estimated incentive spending calculated on vehicles financed through manufacturers' captive finance companies?
The amount of finance support is the difference between the average of the 60-month
commercial bank new car loan rate and the average automobile company’s new car
finance rate (APR).
The main inputs into the Finance Model are:
1. APR Cash Support: Consumer and dealer cash that may be combined with the captive finance companies' compatible special retail financing rates.
2. Finance Rate Support: Finance rate support is calculated as the difference between the cost to finance a vehicle through a manufacturers' captive finance company and a standard industry-wide cost of funds. Historically Motor Intelligence has used a monthly figure that is published by the U.S. Federal Reserve as the cost of funds in its model.
What are Take Rates?
The “Take Rates” are the percent of sales that are allocated to each of the three main types of incentive promotions, lease, finance and retail.
More specifically, the number of vehicles purchased with cash, financed or leased
through manufacturers' captive finance companies. Depending upon a manufacturer’s emphasis, these rates will
change month to month based on a combination of proprietary research and available