Edmunds.com Reports True Cost of Incentives for August: Automakers Spend More Carefully, Less Generously

Edmunds.com Reports True Cost of Incentives for August: Automakers Spend More Carefully, Less Generously


Edmunds.com Reports True Cost of Incentives for July: Record High Incentives for Japanese Automakers

SANTA MONICA, Calif. — September 4, 2007 — Edmunds.com, the premier online resource for automotive information, estimated today that the average automotive manufacturer incentive in the U.S. was $2,362 per vehicle sold in August 2007, down $159, or 6.3 percent, from July 2007, and up $51, or 2.2 percent, from August 2006.

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.

According to Edmunds.com, combined incentives spending for domestic manufacturers averaged $3,293 per vehicle sold in August 2007, down from $3,393 in July 2007. From July to August, European automakers decreased incentives spending by $307 to $2,976 per vehicle sold; Japanese automakers decreased incentives spending by $239 to $1,196 per vehicle sold; and Korean automakers increased incentives spending by $153 to $1,910 per vehicle sold.

In August, the industry's aggregate incentive spending is estimated to have totaled approximately $3.34 billion, essentially unchanged from July. Chrysler, Ford and General Motors spent an aggregate of $2.25 billion, or 67.2 percent of the total; Japanese manufacturers spent $668 million, or 19.9 percent; European manufacturers spent $291 million, or 8.7 percent; and Korean manufacturers spent $139 million, or 4.2 percent.

"It is unusual for incentives spending to fall from month to month this time of year, as manufacturers typically offer generous deals in order to clear old inventory," stated Jesse Toprak, Executive Director of Industry Analysis for Edmunds.com. "This year the domestic automakers are staying true to their value pricing strategy and carefully picking and choosing where to offer marketing support, rather than blanketing the whole line-up with incentives."

True Cost of Incentives for the "Big Six" Automakers
Automaker August 2007 July 2007 August 2006
Chrysler Group $3,758 $4,372 $2,909
Ford $3,145 $2,959 $3,363
General Motors $3,215 $3,299 $2,920
Honda $1,056 $1,272 $1,259
Nissan $2,191 $2,371 $2,396
Toyota $849 $1,153 $710

Among vehicle segments, large trucks had the highest average incentives, $4,349 per vehicle sold, followed by large SUV's at $3,947. Compact cars had the lowest average incentives per vehicle sold, $873, followed by sport cars at $1,037. Analysis of incentives expenditures as a percentage of average sticker price for each segment shows large trucks averaged the highest, 13.7 percent, followed by large cars at 11.9 percent of sticker price. Luxury sports cars averaged the lowest, 3.4 percent, followed by sports cars at 3.6 percent of sticker price.

"The compact car segment is clearly the one to watch," commented Edmunds' AutoObserver.com Senior Editor Michelle Krebs. "Every automaker that doesn't have a successful entry in this hot segment should be looking to build one."

Comparing all brands, in August Mini spent the least — virtually nothing, followed by Scion at $86 per vehicle sold. At the other end of the spectrum, Saab spent the most, $6,732, followed by Cadillac at $6,177 per vehicle sold. Relative to their vehicle prices, Saab and Jeep spent the most, 20.1 percent and 14.6 percent of sticker price, respectively, while Mini spent virtually nothing and Scion spent just 0.5 percent.

About Edmunds Inc. (http://www.edmunds.com/about/)
Edmunds Inc. 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 and home to the oldest and most established automotive community. AutoObserver.com launched in 2007 and provides insightful automotive industry commentary and analysis. Edmunds Inc. is headquartered in Santa Monica, California, and maintains a satellite office in suburban Detroit.

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