Edmunds.com Reports Automakers' True Cost of Incentives; Compact Car Incentives Rose While Large SUV Incentives Dropped


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Edmunds.com Reports Automakers' True Cost of Incentives; Compact Car Incentives Rose While Large SUV Incentives Dropped

Santa Monica, CA - March 3, 2003 - Edmunds.com (http://www.edmunds.com), the premier online consumer resource for automotive information, reported today that the average manufacturer incentive per vehicle sold in the United States was $1,939 in January 2003, down 11.3% from $2,185 in December 2002.

This data and the rest of Edmunds.com's new monthly True Cost of IncentivesSM report takes into account all manufacturers' various incentives programs, including subvented interest rates and lease programs as well as cash rebates to consumers and dealers. To assure 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.

"This data is invaluable in assessing the automakers' commitment to use incentives as a way to drive volume," said Stephen J. Girsky, renowned automotive analyst and managing director of Morgan Stanley. "So, we are incorporating Edmunds.com's 'True Cost of Incentives' into our outlook for new vehicle pricing."

In January 2003, the average incentives for the domestic nameplates offered by DaimlerChrysler, Ford and General Motors were $2,749, as compared to $1,829 in January 2002, an increase of over 50%. However, these manufacturers' average incentives for January decreased 6.6% from the $2,945 average reported for December 2002.

Overall, the large sport-utility vehicle (SUV) segment experienced the greatest reduction in incentives during January, dropping 27.6% to $2,408, as compared to December when large SUVs, with an average of $3,325 per vehicle, had the highest incentives of any vehicle segment. As a result, the large car segment moved into that unfortunate position, with total January incentives of $3,280 per unit.

The compact car segment experienced the largest increase from December 2002 to January 2003, with average incentives rising 13.2% from $1,185 to $1,342.

"Correlating sales volumes and incentives data, we see that the market share for compact and midsize cars increased when the incentives were high, while the market share for compact SUVs and compact pickups increased even though the incentives being offered decreased," stated Dr. Jane Liu, Executive Director of Data Analysis for Edmunds.com. "This indicates that incentives, while costing the automakers a sizable amount, only drive sales to a limited degree, as people strongly consider other factors when making automotive purchases."

About Edmunds.com True Cost of IncentivesSM (TCISM)
Edmunds.com's TCISM is a comprehensive monthly report that measures automobile manufacturers' cost of incentives on vehicles sold in the United States. These costs are reported on a per vehicle basis for the industry as a whole, for each manufacturer, for each make sold by each manufacturer and for each model of each make. TCI covers all aspects of manufacturers' various incentives programs (except volume and similar bonus programs), including dealer cash, manufacturer rebates and consumer savings from subvented APR and lease programs (including subvented lease residual values used in manufacturer leasing programs). Data for the industry, the manufacturers and the makes are derived using weighted averages and are based on actual monthly sales and financing activity.

About Edmunds.com, Inc.
Edmunds.com is the premier online resource for automotive information. Its comprehensive set of data, tools and services, including Edmunds.com True Market Value® pricing, is generated by Edmunds Data Services and is licensed to third parties. For example, the company supplies over 800,000 pages of content for NYTimes.com's auto section. Edmunds.com was named "best car research" site by Forbes ASAP, is viewed by consumers as the "most useful Web site" according to the J.D. Power and Associates New Autoshopper.com StudiesSM for both 2001 and 2002, and was ranked first in the Survey of Car-Shopping Web Sites as reported by The Wall Street Journal. The company is headquartered in Santa Monica, California and maintains a satellite office in Troy, Michigan.

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