Edmunds.com Reports True Cost of Incentives: General Motors' Incentives Expense Relatively Low Despite Success of Employee Discount Program

Edmunds.com Reports True Cost of Incentives: General Motors' Incentives Expense Relatively Low Despite Success of Employee Discount Program


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Edmunds.com Reports True Cost of Incentives: General Motors' Incentives Expense Relatively Low Despite Success of Employee Discount Program

SANTA MONICA, Calif. — July 5, 2005 —Edmunds.com, the premier online resource for automotive information, reported today that the average manufacturer automotive incentive in the United States was $2,736 per vehicle sold in June 2005, down $11, or 0.4%, from June 2004, and up $170, or 6.6%, from May 2005.

Edmunds.com's monthly True Cost of IncentivesSM(TCISM) report takes into account all of the manufacturers' various United States 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.

The industry's aggregated incentives spending totaled a record high $4.6 billion in June. Domestic manufacturers spent $3.74 billion or 82.0% of the total cost, Japanese manufacturers spent $496 million or 11.0%, European manufacturers spent $190 million or 4.2%, and Korean manufacturers spent $130 million or 2.8%.

Overall, combined incentives spending for domestic Chrysler, Ford and General Motors nameplates averaged $3,655 per vehicle sold in June, up $131 from May 2005. Chrysler decreased incentives spending $188 to $3,696 per vehicle sold in June. In the same period, Chrysler's market share decreased 1.2% to 13.1%. Ford increased incentives spending by $249 to $3,188 per vehicle sold in June while its market share decreased 1.7% to 15.9%. General Motors increased incentives spending by $136 to $3,865 per vehicle sold in June while its market share increased 6.7% to 32.1%, the highest U.S. market share for GM since December 2002. The combined market share of the Big Three increased to 61.2% in June, up 3.9% from May.

"Thanks to GM's innovative 'Employee Discount for Everyone' promotion, the company had an outstanding sales month while only marginally increasing its incentives spending, having lowered cash rebates and special financing programs in order to subsidize the promotion," observed Dr. Jane Liu, Vice President of Data Analysis for Edmunds.com. "Customers like the one-price, no-haggle aspect of the program, and continue to respond to it. The result was an undeniable success for GM in June."

From May to June, European automakers increased incentives spending by $35 to an average of $1,912 per vehicle sold; their market share slid 0.2% to 5.9%. Japanese automakers decreased incentives spending by $61 to an average of $1,047 per vehicle sold; their market share fell 3.7% to 28.3% ┬┐ the lowest point since September 2004. Korean automakers increased incentives spending by $37 to an average of $1,846 per vehicle sold; their market share decreased 0.2% to 4.2%.

Comparing all brands in June, Mini spent only $11 on incentives while Scion spent $93 and Porsche spent $270 per vehicle sold. At the other end of the spectrum, Lincoln took over the spot for the biggest spender at $6,357, followed by Cadillac at $6,075 and Mercury at $4,654 per vehicle sold. Looking at incentives expenditures as a percentage of MSRP for each brand, Mercury spent the most, 15.8%, while Mini and Porsche spent the least, 0.1% and 0.4%, respectively.

Among vehicle segments, large SUVs continued to offer the highest average incentives, $4,839 per vehicle sold, while sports cars had the lowest average incentives per vehicle at $738. Looking at incentives expenditures as a percentage of MSRP for each segment, large trucks were the highest, 11.6%, while sports cars were the lowest, 2.5%.

Midsize cars have lost the most market share since June 2004, decreasing from 16.8% to 13.5%, while large trucks have gained the most market share during that period, up from 14.0% to 17.0% of the new vehicle market.

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.com Information Solutions and is licensed to third parties. For example, the company supplies content for the auto sections of NYTimes.com, AOL, About.com and IGN.com, provides weekly data to Automotive News and delivers monthly data reports to Wall Street analysts. Edmunds.com also publishes a high-speed, on-screen car magazine called Inside Line available free at www.insideline.com. Edmunds.com was named "best car research" site by Forbes ASAP, has been selected by consumers as the "most useful Web site" according to every J.D. Power and Associates New Autoshopper.com StudySM 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, Calif. and maintains a satellite office outside Detroit.

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