Edmunds.com Reports True Cost of Incentives: Average Incentives Fall as 2006 Model Year Vehicles Gain Market Share

Edmunds.com Reports True Cost of Incentives: Average Incentives Fall as 2006 Model Year Vehicles Gain Market Share


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Edmunds.com Reports True Cost of Incentives: Average Incentives Fall as 2006 Model Year Vehicles Gain Market Share

SANTA MONICA, Calif. — October 3, 2005 — Edmunds.com, the premier online resource for automotive information, reported today that based on preliminary data, the average manufacturer automotive incentive in the U.S. was $2,366 per vehicle sold in September 2005, down $780, or 24.8 percent from September 2004, and down $245, or 9.4 percent, from August 2005.

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

"The model year-end clearances we usually see in September happened in July and August of this year, largely in the form of this summer's employee pricing promotions," remarked Dr. Jane Liu, Vice President of Data Analysis for Edmunds.com. "This month, with the resulting lower 2005 model year inventories, the new 2006 models — with typically lower incentives — had larger than usual market share for September, holding the average level of incentives down."

The industry's aggregate incentives spending is estimated to have totaled $3 billion in September. Domestic manufacturers spent $2.2 billion or 72 percent of the total cost, Japanese manufacturers spent $532 million or 18 percent, European manufacturers spent $210 million or 7 percent, and Korean manufacturers spent $109 million or 4 percent.

Based on the preliminary data, combined incentives spending for domestic Chrysler, Ford and General Motors nameplates averaged $3,140 per vehicle sold in September — the lowest since April 2003 — down $476 from August 2005. Chrysler was the only domestic automaker to increase incentives spending in September, up $36 to $3,353 per vehicle sold, Ford decreased incentives spending by $652 to $3,089 per vehicle sold in September, and General Motors decreased incentives in September by $616 to $3,068 per vehicle sold.

From August to September, European automakers decreased incentives spending by $71 to an average of $2,368 per vehicle sold. Japanese automakers increased incentives spending by $20 to $1,230 per vehicle sold. Korean automakers increased incentives spending by $22 to an average of $1,752 per vehicle sold.

Comparing all brands, in September Mini spent only $17 while Scion spent $109 and Porsche spent $408 per vehicle sold. At the other end of the spectrum, Jaguar spent the most, $8,194, followed by Lincoln at $5,399 and Cadillac at $4,371 per vehicle sold. Looking at incentives expenditures as a percentage of MSRP for each brand, Mitsubishi and Jaguar spent the most, 16.1 percent and 15 percent, respectively, while Mini and Porsche spent the least, 0.1 percent and 0.5 percent, respectively.

Among vehicle segments, large SUVs continued to offer the highest average incentives, $4,704 per vehicle sold, while sports cars had the lowest average incentives per vehicle at $774. Looking at incentives expenditures as a percentage of MSRP for each segment, large SUVs were the highest, 10.9 percent, while sports cars were the lowest, 2.6 percent.

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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