Edmunds.com Reports True Cost of Incentives: Cash for Clunkers and Production Cuts Help Lower July Incentives

Edmunds.com Reports True Cost of Incentives: Cash for Clunkers and Production Cuts Help Lower July Incentives


Edmunds.com Reports True Cost of Incentives: Cash for Clunkers and Production Cuts Help Lower July Incentives

SANTA MONICA, Calif. — August 3, 2009 — Edmunds.com, the premier online resource for automotive information, estimated today that the average automotive manufacturer incentive in the U.S. was $2,735 per vehicle sold in July 2009, down $134, or 4.7 percent, from June 2009, and up $90, or 3.4 percent, from July 2008. This represents the fourth consecutive month in which incentives have fallen.

"Comparing June with July, incentives usually increase between $50 and $200 per car sold, but this year they are down $134 per car," said Jessica Caldwell, Manager of Pricing and Industry Analysis for Edmunds.com. "The Cash for Clunkers frenzy has given automakers the opportunity to reduce their own investment in creating sales momentum, and to maximize profitability in the process."

According to Edmunds.com, combined incentives spending for domestic manufacturers averaged $3,743 per vehicle sold in July 2009, up from $3,727 in June 2009. From June 2009 to July 2009, European automakers increased incentives spending by $282 to $3,504 per vehicle sold; Japanese automakers decreased incentives spending by $153 to $1,591 per vehicle sold; and Korean automakers decreased incentives spending by $136 to $2,927 per vehicle sold.

True Cost of Incentives for the Top Seven Automakers
Automaker July 2009 June 2009 July 2008
Chrysler Group (Chrysler, Dodge, Jeep) $4,336 $4,904 $4,022
Ford (Ford, Lincoln, Mercury, Volvo) $3,343 $3,537 $3,202
General Motors (Buick, Cadillac, Chevrolet, GMC, Hummer, Pontiac, Saab, Saturn) $3,884 $3,429 $4,063
Honda (Acura, Honda) $1,255 $1,743* $1,279
Hyundai (Hyundai, Kia) $2,927 $3,063 $2,132
Nissan (Infiniti, Nissan) $2,715 $2,581 $2,445
Toyota (Lexus, Scion, Toyota) $1,327 $1,341 $1,243
Industry Average $2,735 $2,869 $2,645

* Denotes a record

"Automakers cut production earlier this year to deal with lower sales volumes, not anticipating this sales activity midway through the year," said Michelle Krebs, Senior Editor of Edmunds' AutoObserver.com. "Which will run out first — clunker money or the replacement cars people want to buy?"

In July 2009, the industry's aggregate incentive spending is estimated to have totaled approximately $2.6 billion, up 5.6 percent from June 2009. Chrysler, Ford and General Motors spent an aggregate of $1.5 billion, or 56.6 percent of the total; Japanese manufacturers spent $640 million, or 24.5 percent; European manufacturers spent $275 million, or 10.5 percent; and Korean manufacturers spent $217 million, or 8.3 percent.

Among vehicle segments, premium sport cars had the highest average incentives, $7,074 per vehicle sold, followed by premium luxury cars at $4,402. Subcompact cars had the lowest average incentives per vehicle sold, $1,371, followed by compact cars at $1,824. Analysis of incentives expenditures as a percentage of average sticker price for each segment shows large cars averaged the highest, 12.9 percent, followed by large trucks at 12.7 percent of sticker price. Premium luxury cars averaged the lowest with 5.4 percent and sport cars followed with 5.9 percent of sticker price.

Comparing all brands, in July Scion spent $294 followed by smart at $394 per vehicle sold. At the other end of the spectrum, Cadillac spent the most, $6,165, followed by HUMMER at $5,891 per vehicle sold. Relative to their vehicle prices, Pontiac and Hyundai spent the most, 18.9 percent and 15.9 percent of sticker price, respectively; while Scion spent 1.7 and Lexus spent 2.7 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 (http://www.edmunds.com/about/)
Edmunds publishes four Web sites that empower, engage and educate automotive consumers, enthusiasts and insiders.
Edmunds.com, the premier online resource for automotive consumer information, launched in 1995 as the first automotive information Web site. Its most popular feature, the Edmunds.com True Market Value®, is relied upon by millions of people seeking current transaction prices for new and used vehicles. 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 Study(SM), was ranked first in the Survey of Car-Shopping Web Sites by The Wall Street Journal and was rated "#1" in Keynote's study of third-party automotive Web sites. Inside Line launched in 2005 and is the most-read automotive enthusiast Web site. CarSpace launched in 2006 and is an automotive social networking Web site. AutoObserver.com launched in 2007 and provides insightful automotive industry commentary and analysis. Edmunds is headquartered in Santa Monica, California, and maintains a satellite office in suburban Detroit.

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