Edmunds.com Reports True Cost of Incentives^SM: Car Bargains Didn't End in December

Edmunds.com Reports True Cost of Incentives^SM: Car Bargains Didn't End in December

SANTA MONICA, Calif. — February 1, 2011 — Edmunds.com, the premier online resource for automotive information, estimated today that the average automotive manufacturer incentive in the U.S. was $2,530 per vehicle sold in January 2011, essentially unchanged from December 2010, but up $177, or — 7.5 percent — from January 2010.

"January incentives were flat compared with December 2010, which means many car buyers didn't actually have to rush to take advantage of heavily advertised 'year end' deals," said Jessica Caldwell, director of industry analysis for Edmunds.com. "Dealerships and automakers look to finish the year with strong sales numbers, and they've become very skilled at leading consumers to believe that the best deals are only available in December. It's simply not true for most brands."

According to Edmunds.com, combined incentives spending for domestic manufacturers averaged $3,371 per vehicle sold in January 2011, up from $3,325 in December 2010. From December to January, European automakers decreased incentives spending by $161 to $2,122 per vehicle sold; Japanese automakers decreased incentives spending by $3 to $1,876 per vehicle sold; and Korean automakers decreased incentives spending by $73 to $1,427 per vehicle sold.

In January 2011, the industry's aggregate incentive spending is estimated at approximately $2.06 billion, down 28.6 percent from December 2010. Chrysler, Ford and General Motors spent an aggregate of $1.2 billion, or 59.8 percent of the total; Japanese manufacturers spent $589 million, or 28.5 percent; European manufacturers spent $142 million, or 6.9 percent; and Korean manufacturers spent $99 million, or 4.8 percent.

"General Motors' incentive spend in January certainly raises some eyebrows," said Caldwell. "GM spent more on incentives in January than any of their Big 6 rivals, even as they sold more 2011 model year vehicles. This suggests that their new model year vehicles are more heavily discounted than one might expect."

Among vehicle segments, large cars had the highest average incentives at $5,149 per vehicle sold, followed by large trucks at $3,661. Subcompact cars had the lowest average incentives per vehicle sold at $1,298 followed by compact SUVs at $1,698. Analysis of incentives expenditures as a percentage of average sticker price for each segment shows large cars averaged the highest — 16.0 percent — followed by compact cars at 10.2 percent of sticker price. Premium sport cars averaged the lowest with 2.2 percent and premium luxury cars followed with 3.3 percent of sticker price.

Comparing all brands, Subaru spent the least in January 2011 at $548, followed by Porsche at $656 per vehicle sold. At the other end of the spectrum, Saab spent the most — $8,124 — followed by Cadillac at $5,641 per vehicle sold. Relative to their vehicle prices, Saab and Chrysler spent the most, 19.9 percent and 15.6 percent of sticker price, respectively; while Porsche spent 0.75 percent and Subaru spent 2.1 percent.

Edmunds.com's monthly True Cost of Incentives^SM (TCI^SM) 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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