Automaker Incentives Hit Lowest Levels Since 2005, Reports Edmunds.com


Automaker Incentives Hit Lowest Levels Since 2005, Reports Edmunds.com

SANTA MONICA, Calif. — May 3, 2011 — Edmunds.com, the premier online resource for automotive information, estimated today that the average True Cost of IncentivesSM (TCISM) of automotive manufacturers was $2,118 per new car sold in April 2011, down $250, or 10.6 percent, from March 2011, and down $515, or 19.6 percent, from April 2010. This is the lowest incentive spending by the auto industry since Edmunds.com reported average TCI of $1,962 in October 2005.

"This is the clearest indication yet that automakers are gearing up for inventory shortages," said Jessica Caldwell, director of industry analysis for Edmunds.com. "Demand for new cars has been growing as economic recovery has strengthened, but now the industry may experience a hiccup if consumers decide to wait for the next deal to come around, which may not be until the autumn."

A new commentary by Edmunds.com CEO Jeremy Anwyl reveals that consumer interest already started to fade throughout the month of April. The seasonally adjusted annual rate (SAAR) of car sales was as high as 14.7 million units in the first few days of the month. By the last week of April, the SAAR had fallen to 13 million. More on this can be found at http://www.autoobserver.com/2011/05/april-sales-pace-bucks-tradition.html.

"April sales usually start slow and then jump after April 15, which may have something to do tax-filing day," said Anwyl. "This year we have seen the opposite pattern."

According to Edmunds.com, combined incentives spending for domestic manufacturers averaged $2,683 per vehicle sold in April 2011, down from $3,081 in March 2011. From March 2011 to April 2011, European automakers decreased incentives spending $37 to $1,885 per vehicle sold; Japanese automakers decreased incentives spending $236 to $1,696 per vehicle sold; and Korean automakers increased incentives spending $38 to $1,285 per vehicle sold.

True Cost of Incentives for the Top Six Automakers
Automaker April 2011 March 2011 April 2010
Chrysler Group (Chrysler, Dodge, Fiat, Jeep) $2,455 $2,882 $3,338
Ford (Ford, Lincoln) $2,421 $3,012 $3,232
General Motors (Buick, Cadillac, Chevrolet, GMC) $3,016 $3,259 $3,301
Honda (Acura, Honda) $1,715 $1,765 $1,779
Nissan (Infiniti, Nissan) $1,886 $2,367 $2,474
Toyota (Lexus, Scion, Toyota) $1,687 $1,968 $2,329
Industry Average $2,118 $2,368 $2,633

In April 2011, the industry's aggregate incentive spending totaled approximately $2.5 billion, down 15.9 percent from March 2011. Chrysler, Ford and General Motors spent an aggregate of $1.4 billion, or 56.9 percent of the total; Japanese manufacturers spent $751 million, or 30.3 percent; European manufacturers spent $186 million, or 7.5 percent; and Korean manufacturers spent $133 million, or 5.4 percent.

Edmunds.com's monthly True Cost of IncentivesSM (TCISM) report takes into account all automakers' various U.S. incentives programs, including subvented interest rates and lease programs, as well as cash rebates to consumers and dealers. To ensure the greatest possible accuracy, Edmunds.com bases its calculations on sales volume, including the mix of vehicle makes and models for each month, as well as on the proportion of vehicles for which each type of incentive was used.

For updates on automotive industry news and analysis, please register to receive the AutoObserver.com newsletter at http://www.edmunds.com/newsletter.

About Edmunds.com, Inc. (http://www.edmunds.com/help/about/index.html)

Edmunds.com Inc. publishes Web sites that empower, engage and educate automotive consumers, enthusiasts and insiders. Edmunds.com, the premier online resource for automotive information, launched in 1995 as the first automotive information Web site and hosts the most established automotive community online. Its mobile site, accessible from any smartphone at www.edmunds.com, makes car pricing and other research tools available for car shoppers at dealerships and otherwise on the go. InsideLine.com is the most-read automotive enthusiast Web site. Its mobile site, accessible from any smartphone at www.insideline.com, features the wireless Web's highest quality car photos and videos. AutoObserver.com provides insightful automotive industry commentary and analysis. Edmunds.com Inc. is headquartered in Santa Monica, California, and maintains a satellite office in suburban Detroit. Follow Edmunds.com on Twitter@edmunds and fan Edmunds.com on Facebook at http://www.facebook.com/edmunds.

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