Edmunds.com Reports True Cost of Incentives: Auto Incentives Down to Pre-Recession Levels


Edmunds.com Reports True Cost of Incentives: Auto Incentives Down to Pre-Recession Levels

SANTA MONICA, Calif. — January 4, 2011 — Edmunds.com, the premier online resource for automotive information, estimated today that the average automotive manufacturer incentive in the U.S. was $2,528 per vehicle sold in December 2010, up $64, or 2.6 percent, from November 2010, but down $26, or 1.0 percent, from December 2009.

"Incentives have dropped back to pre-recession levels after surging in 2009 as manufacturers tried anything they could think of to lure customers to buy their vehicles," stated Edmunds.com Senior Analyst Michelle Krebs in her report on AutoObserver.com. "While industry averages are down, spending by Japanese automakers in aggregate is up, led by Toyota as it tries to recoup from recalls that triggered a sales slump."

According to Edmunds.com, combined incentives spending for domestic manufacturers averaged $3,301 per vehicle sold in December 2010, up from $3,215 in November 2010. From November 2010 to December 2010, European automakers increased incentives spending by $18 to $2,376 per vehicle sold; Japanese automakers increased incentives spending by $34 to $1,821 per vehicle sold; and Korean automakers decreased incentives spending by $118 to $1,508 per vehicle sold.

True Cost of Incentives for the Top Seven Automakers
Automaker December 2010 November 2010 December 2009
Chrysler Group (Chrysler, Dodge, Jeep) $3,349 $3,099 $2,585
Ford (Ford, Lincoln, Mercury) $3,188 $3,173 $3,049
General Motors (Buick, Cadillac, Chevrolet, GMC) $3,370 $3,300 $4,017
Honda (Acura, Honda) $1,521 $1,419 $1,257
Nissan (Infiniti, Nissan) $2,121 $2,180 $2,161
Toyota (Lexus, Scion, Toyota) $1,983 $1,951 $1,666
Industry Average $2,528 $2,464 $2,554

"Looking at year-end averages, Honda, Nissan and Toyota are each spending more than they did in 2008 or 2009; on the other hand, each of the domestic automakers dramatically lowered its incentives in 2010 and yet collectively gained market share," reported Edmunds.com Analyst Ivan Drury.

True Cost of Incentives for the Top Seven Automakers
Automaker 2008 2009 2010
Chrysler Group (Chrysler, Dodge, Jeep) $3,869 $4,131 $3,195
Ford (Ford, Lincoln, Mercury) $3,369 $3,334 $3,173
General Motors (Buick, Cadillac, Chevrolet, GMC) $3,573 $3,889 $3,515
Honda (Acura, Honda) $1,201 $1,276 $1,563
Nissan (Infiniti, Nissan) $2,098 $2,455 $2,519
Toyota (Lexus, Scion, Toyota) $1,317 $1,598 $2,119
Industry Average $2,588 $2,794 $2,608

In December 2010, the industry's aggregate incentive spending is estimated to have totaled approximately $2.85 billion, up 32.9 percent from November 2010. Chrysler, Ford and General Motors spent an aggregate of $1.7 billion, or 59.7 percent of the total; Japanese manufacturers spent $774 million, or 27.2 percent; European manufacturers spent $250 million, or 8.8 percent; and Korean manufacturers spent $125 million, or 4.4 percent.

Among vehicle segments, premium sport cars had the highest average incentives, $5,757 per vehicle sold, followed by large cars at $4,686. Subcompact cars had the lowest average incentives per vehicle sold, $1,212, followed by vans at $1,737. Analysis of incentives expenditures as a percentage of average sticker price for each segment shows large cars averaged the highest, 14.7 percent, followed by large trucks at 10.3 percent of sticker price. Premium luxury cars averaged the lowest with 3.3 percent and luxury SUVs followed with 4.3 percent of sticker price.

Comparing all brands, in December Subaru spent the least, $522 followed by Scion at $881 per vehicle sold. At the other end of the spectrum, Saab spent the most, $7,998, followed by Mercury at $6,448 per vehicle sold. Relative to their vehicle prices, Mercury and Saab spent the most, 21.6 percent and 19.3 percent of sticker price, respectively; while Porsche spent 1.6 and Subaru spent 2.0 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.

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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