Edmunds.com Reports True Cost of Incentives: Average Incentives Fall as 2006 Model Year Vehicles Enter Marketplace

Edmunds.com Reports True Cost of Incentives: Average Incentives Fall as 2006 Model Year Vehicles Enter Marketplace


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Edmunds.com Reports True Cost of Incentives: Average Incentives Fall as 2006 Model Year Vehicles Enter Marketplace

SANTA MONICA, Calif. — September 1, 2005 —Edmunds.com, the premier online resource for automotive information, reported today that, based on the preliminary data, the average manufacturer automotive incentive in the U.S. was $2,655 per vehicle sold in August 2005, down $66, or 2.4%, from August 2004, and down $326, or 10.9%, from July 2005.

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

"As the new model year vehicles enter and begin to dominate the marketplace, average incentive spending falls," remarked Dr. Jane Liu, Vice President of Data Analysis for Edmunds.com. "This decline will go on as long as the new model year vehicles are in high demand, likely until Jan. 2006 for most automakers."

Chrysler's 2006 model year vehicles made up 12% of the company's sales in August, up from 7% in July. Ford's 2006 model year vehicles made up 18% of the company's sales in August, up from 5% in July. GM's 2006 model year vehicles made up 18% of the company's sales in August, up from 4% in July.

Some European brands sold more 2006 model year vehicles than 2005 model year vehicles in August: 69% of Mercedes-Benz vehicles, 57% of Land Rover vehicles and 50% of BMW vehicles sold in August are 2006 model year vehicles. On the other hand, 2006 model year vehicles captured a very small percentage of the Japanese brands' sales in August -- the lowest in the industry: 3% of Honda vehicles, 1% of Nissan vehicles, and 7% of Toyota models sold in August represent the new model year.

The industry's aggregate incentives spending is estimated to have totaled $4.2 billion in August. Domestic manufacturers spent $3.3 billion or 76% of the total cost, Japanese manufacturers spent $630 million or 15%, European manufacturers spent $246 million or 6%, and Korean manufacturers spent $125 million or 3%.

Based on the preliminary data, combined incentives spending for domestic Chrysler, Ford and General Motors nameplates averaged $3,650 per vehicle sold in August, down $292 from July 2005. Chrysler decreased incentives spending $302 to $3,321 per vehicle sold, Ford decreased incentives spending by $77 to $3,799 per vehicle sold in August, and General Motors decreased incentives in August by $417 to $3,718 per vehicle sold.

From July to August, European automakers increased incentives spending by $86 to an average of $2,468 per vehicle sold. Japanese automakers increased incentives spending by $16 to a record high average of $1,252 per vehicle sold. Korean automakers decreased incentives spending by $120 to an average of $1,825 per vehicle sold.

Comparing all brands in August, Mini spent only $26 while Scion spent $96 and Porsche spent $157 per vehicle sold. At the other end of the spectrum, Cadillac spent the most, $6,227, followed by Lincoln at $5,944 and Saab at $5,883 per vehicle sold. Looking at incentives expenditures as a percentage of MSRP for each brand, Saab and Mercury spent the most, 18.3% and 15.7%, respectively, while Mini and Porsche spent the least, 0.1% and 0.2%, respectively.

Among vehicle segments, large SUVs continued to offer the highest average incentives, $4,955 per vehicle sold, while sports cars had the lowest average incentives per vehicle at $1,115. Looking at incentives expenditures as a percentage of MSRP for each segment, large SUVs were the highest, 11.2%, while sports cars were the lowest, 3.8%.

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 ValueŽ 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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