FOR IMMEDIATE RELEASE
Edmunds.com Reports True Cost of Incentives: Incentives Drop, Domestic Automaker Market Share Falls to Record Low
SANTA MONICA, Calif. — November 11, 2004 — Edmunds.com, the premier online resource for automotive information, reported today that the average manufacturer incentive per vehicle sold in the United States was $2,655 per vehicle sold in October 2004, up $134, or 5.3%, from October 2003, and down $491, or 15.6%, from September 2004.
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.
Overall, combined incentives spending for domestic Chrysler, Ford and General Motors nameplates was $3,663 per unit in October, down $616 from September 2004. Chrysler lowered incentives spending in October by $133 to $3,644 per vehicle and gained 1.0% market share, achieving 12.8% in total. Ford decreased incentives spending by $637 to $3,410 per vehicle, and gained 0.3% market share, achieving 18.4%. GM had the most dramatic drop in incentives spending in October, down by $735 to $3,858 per vehicle. GM experienced a steep 6.0% decrease of its U.S. market share, falling to 25.3%, which is its lowest point since September 2002.
As a result of GM's decrease, total U.S. market share for domestic nameplates fell to 56.5%, the lowest in recorded history.
In October 2004, Korean automakers reduced incentives spending by $22 to average $2,185 per vehicle while European automakers reduced incentives spending by $167 to average $2,330 per vehicle sold. Japanese automakers spent $929 per vehicle sold in October, up slightly from $911 the prior month.
"Most manufacturers did not have to rely on incentives as heavily this month since they were selling more 2005 model year vehicles," said Dr. Jane Liu, Vice President of Data Analysis for Edmunds.com. "Also, consumers realize that 2005 models will hold their value longer than their 2004 counterparts, and are willing to pay more for them."
Of all brands, Mini spent the least on incentives, $12 per vehicle sold, while Scion spent only $73 and Lexus spent just $167. At the other end of the spectrum, Lincoln was the biggest spender in October at $4823 per vehicle sold, followed by Saab at $4,566 and Jaguar at $4,345.
Among vehicle segments, large SUVs continued to offer the highest average incentives, $4,680 per vehicle sold. Other segments with high incentives were large trucks at $3,373 and large cars at $3,258. Compact cars had the lowest average incentives at $1,449 per vehicle sold, followed by luxury sports cars at $1,880 and luxury SUVs at $1,933.
"In most cases, vehicles with high sticker prices tend to have correspondingly high incentives, but the luxury sports car and luxury SUV segments are selling without much money on the hood," observes Dr. Liu. "Products in those segments are very desirable right now, even as fuel prices fluctuate."
Midsize cars have lost the most market share since October 2003, decreasing from 16.6% to 15.6%, while large cars have gained the most market share during that period, up from 4.2% to 5.8% of the U.S. 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 over 800,000 pages of content for the auto sections of AOL and NYTimes.com, provides weekly data to Automotive News and delivers monthly data reports to Wall Street analysts. 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.