A Rebate is a demand manipulation, resource leveling tool that most auto makers utilize in one form or another. The reason that American auto makers offer relativelly larger rebates is directly related to workforce (in)flexibility. UAW contracts specify a number of workers on a specific line and a number of hours per week. American auto makers know just as fast as anyone else when demand is below forecasts. Unfortunately, they cannot adjust output quickly due to an inflexible UAW workforce. In lots of cases, they must keep producing vehicles that they know ahead of time will be sold for deep discounts. Japanese plants (including those in the US) are more successful in shifting workers to different jobs to adjust to shifting demand. They do it with a very good record of not laying off workers. As a result of this non-UAW flexibility, they aren't forced incent buyers with huge rebates on vehicles they didn't want to produce in the first place. You could argue that this is partially due to bunring off inventory of supplies that have already been ordered. You could argue that, and you would be wrong. Japanese manufacturers have the similar agreements with their vendors so that is no different. The exception would be if vendor is also a UAW shop. Every rebate dollar adds up and they are all added into the price of next years vehicles. The State Legislature of Michigan know this...hence the Right to Work Bill.