Edmunds.com Reports True Cost of Incentives: Car Incentives Falling as Inventory Dwindles

Edmunds.com Reports True Cost of Incentives: Car Incentives Falling as Inventory Dwindles


Edmunds.com Reports True Cost of Incentives: Car Incentives Falling as Inventory Dwindles

SANTA MONICA, Calif. — June 2, 2010 — Edmunds.com, the premier online resource for automotive information, estimated today that the average automotive manufacturer incentive in the U.S. was $2,603 per vehicle sold in May 2010, down $28, or 1.1 percent, from April 2010, and down $340, or 11.6 percent, from May 2009.

"Inventory levels are relatively low, so many automakers have cut back on incentives," stated Jessica Caldwell, Director of Industry Analysis for Edmunds.com. "Bargain-hunters planning to hold out for traditional late summer deals would be wise to start shopping now, since there is a less dramatic need for old model year clearance sales this year and the 2010 inventory is already slim pickings."

According to Edmunds.com, combined incentives spending for domestic manufacturers averaged $3,366 per vehicle sold in May 2010, up from $3,298 in April 2010. From April 2010 to May 2010, European automakers decreased incentives spending by $211 to $2,300 per vehicle sold; Japanese automakers decreased incentives spending by $148 to $1,913 per vehicle sold; and Korean automakers decreased incentives spending by $29 to $1,738 per vehicle sold.

True Cost of Incentives for the Top Seven Automakers
Automaker May 2010 April 2010 May 2009
Chrysler Group (Chrysler, Dodge, Jeep) $3,115 $3,338 $4,101
Ford (Ford, Lincoln, Mercury, Volvo) $3,042 $3,232 $3,611
General Motors (Buick, Cadillac, Chevrolet,
GMC, Hummer, Pontiac, Saab, Saturn)
$3,739 $3,301 $3,678
Honda (Acura, Honda) $1,556 $1,779 $1,653
Hyundai (Hyundai, Kia) $1,738 $1,767 $2,785
Nissan (Infiniti, Nissan) $2,321 $2,474 $2,678*
Toyota (Lexus, Scion, Toyota) $2,169 $2,329 $1,711
Industry Average $2,603 $2,631 $2,943

*Denotes a record

In May 2010, the industry's aggregate incentive spending is estimated to have totaled approximately $2.81 billion, up 9.1 percent from April 2010. Chrysler, Ford and General Motors spent an aggregate of $1.7 billion, or 59.7 percent of the total; Japanese manufacturers spent $786 million, or 27.9 percent; European manufacturers spent $208 million, or 7.4 percent; and Korean manufacturers spent $140 million, or 4.9 percent.

"Compared with three years ago, the Japanese automakers have increased their incentives spending by 62 percent while domestic automakers are spending a mere seven percent more," noted Edmunds.com Senior Analyst Michelle Krebs in her report on AutoObserver.com. "In the same period, Japanese market share has only increased by two percent while domestic market share went down by 10 percent."

Among vehicle segments, large trucks had the highest average incentives, $4,650 per vehicle sold, followed by premium sport car at $3,892. Sport cars had the lowest average incentives per vehicle sold, $1,263, followed by subcompact cars at $1,296. Analysis of incentives expenditures as a percentage of average sticker price for each segment shows large trucks averaged the highest, 12.7 percent, followed by compact cars at 11.5 percent of sticker price. Premium luxury cars averaged the lowest with 2.3 percent and sport cars followed with 3.6 percent of sticker price.

Comparing all brands, in May Scion spent the least, $457 followed by Subaru at $667 per vehicle sold. At the other end of the spectrum, Saab spent the most, $6,813, followed by Lincoln at $4,987 per vehicle sold. Relative to their vehicle prices, Saab and Chrysler spent the most, 17.1 percent and 12.2 percent of sticker price, respectively; while Porsche spent 1.7 and Subaru spent 2.6 percent.

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.

About Edmunds.com, Inc. (http://www.edmunds.com/about/)
Edmunds.com Inc. publishes four 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. 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. CarSpace is the most established automotive social networking Web site. 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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