Japanese Incentive Spending in July Could Trigger a Rush of U.S. Automaker Incentives, Reports Edmunds.com


Japanese Incentive Spending in July Could Trigger a Rush of U.S. Automaker Incentives, Reports Edmunds.com

SANTA MONICA, Calif. — August 2, 2011 — A surge in incentive spending by Japanese automakers last month may force U.S. car manufacturers to boost their own spending in the coming month, reports Edmunds.com, the premier online resource for automotive information.

According to an analysis of Edmunds.com's True Cost of IncentivesSM (TCISM), Japanese brands increased spending 24.5 percent from June to July to an average of $1,990 per vehicle. By comparison, U.S. automakers increased spending just 4.5 percent over the same period to $2,919 per vehicle. But while in July the average U.S. car incentive was still 47 percent higher than the average incentive on a Japanese car, the difference has lessened considerably since a year ago when incentives on U.S. vehicles were 69 percent higher than on Japanese vehicles.

"U.S. manufacturers traditionally have kept a wide incentive gap between themselves and their Japanese counterparts in order to stay price competitive," said Jessica Caldwell, senior analyst at Edmunds.com. "As Japanese brands struggled to recover following the March earthquake, American brands could afford to minimize that gap. With production working its way back to normal, the Japanese are making a strong play for their lost market share and American automakers may need to kick in more incentives as they fight for more consumers."

Average True Cost of IncentivesSM (TCISM), by Car Manufacturer
Manufacturer 11-Jul 11-Jun 10-Jul Jul-11 vs. Jun-11 Jul-11 vs. Jul-10
Chrysler $2,757 $2,601 $3,132 6.0% -12.0%
Ford $2,644 $2,707 $3,111 -2.3% -15.0%
GM $3,198 $2,951 $4,185 8.4% -23.6%
Honda $1,580 $1,154 $1,736 36.9% -9.0%
Nissan $2,447 $2,033 $2,957 20.4% -17.2%
Toyota $2,172 $1,731 $2,234 25.5% -2.8%
Industry $2,371 $2,204 $2,765 7.6% -14.2%

All three major Japanese automakers increased their average incentives in July by at least 20 percent. Honda paced the group with a 36.9 percent increase, even as it had the lowest per vehicle incentive of the top six automakers ($1,580). General Motors had the highest increase in incentive spending among all American brands (+8.4%), while Ford actually decreased its incentive spend in July by 2.3 percent.

Overall, automakers' incentives averaged $2,371 per vehicle in July, up 7.6 percent over June, but down 14.2 percent vs. July 2010.

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.

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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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