Edmunds.com Reports True Cost of Incentives for December, Reflects on 2006

Edmunds.com Reports True Cost of Incentives for December, Reflects on 2006


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Edmunds.com Reports True Cost of Incentives for December, Reflects on 2006

SANTA MONICA, Calif. — January 3 , 2006 — Edmunds.com, the premier online resource for automotive information, estimated today that the average automotive manufacturer incentive in the U.S. was $2,376 per vehicle sold in December 2006, up $74, or three percent, from November 2006, and down $156, or six percent, from December 2005. Looking at the year as a whole, incentives averaged $2,469 per vehicle sold in 2006, down 2.6 percent from $2,536 in 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.

"Throughout 2006, most automakers offered substantial incentives on gas-guzzling SUVs and trucks as well as models due for refresh," stated Jesse Toprak, Executive Director of Industry Analysis for Edmunds.com. "It's arguable that some incentives went so high as to reach the point of diminishing return."

True Cost of Incentives for "Big Six" Automakers
Automaker 2005 2006 Change
Chrysler Group $3,558 $3,812 7.1%
Ford $3,150 $3,437 9.1%
General Motors $3,604 $2,982 -17.3%
Honda $644 $720 11.8%
Nissan $1,776 $2,314 30.3%
Toyota $973 $1,055 8.4%

In December, the industry's aggregate incentive spending is estimated to have totaled approximately $3.3 billion, up from $2.8 billion in November. Chrysler, Ford and General Motors spent an aggregate of $2.4 billion, or 72 percent of the total; Japanese manufacturers spent $548 million, or 17 percent; European manufacturers spent $280 million, or nine percent; and Korean manufacturers spent $76 million, or two percent.

According to Edmunds.com, combined incentives spending for domestic manufacturers averaged $3,263 per vehicle sold in December, down from $3,282 in November 2006. From November to December, European automakers increased incentives spending by $460 to $2,606 per vehicle sold; Japanese automakers increased incentives spending by $104 to $1,131 per vehicle sold; and Korean automakers decreased incentives spending by $299 to $1,341 per vehicle sold.

True Cost of Incentives for "Big Six" Automakers
Automaker December 2006 November 2006 December 2005
Chrysler Group $4,416 $4,112 $4,098
Ford $3,829 $3,528 $3,125
General Motors $2,393* $2,686 $3,445
Honda $472 $374 $609
Nissan $1,743 $1,998 $1,810
Toyota $1,363 $927 $1,196

*GM's lowest TCI since April 2002

Among vehicle segments, large trucks had the highest average incentives, $3,937 per vehicle sold, followed by large SUVs at $3,886. Compact cars had the lowest average incentives per vehicle sold, $765, followed by sports cars at $1,031. Analysis of incentives expenditures as a percentage of average sticker price for each segment shows minivans averaged the highest, 13.1 percent, followed by large trucks at 12.7 percent of sticker price. Luxury sport cars averaged the lowest, 2.6 percent, followed by sports cars at 3.6 percent of sticker price.

"There is a dramatic story to be told about minivans in December, as incentives for that market segment shot up by an average of $500 month-over-month and nearly $1,000 year-over-year mostly because of excessive 2006 inventory," observed Toprak. "Chrysler and Dodge incentivized its minivans by more than $5,000 per vehicle, the average Toyota Sienna buyer benefited from nearly $5,000 in savings, while Ford offered approximately $3,400 per Freestar sold. Incentives on other minivan models were below the average for all vehicles: for example, incentives on the Chevy Uplander and Kia Sedona averaged under $2,000 while the Honda Odyssey was incentivized by less than $500 per vehicle."

Comparing all brands, in December Scion spent the least, $94, followed by Honda at $472 per vehicle sold. At the other end of the spectrum, Jeep spent the most, $5,200, followed by Lincoln at $4,597 per vehicle sold. Relative to their vehicle prices, Jeep and Dodge spent the most, 19.1 percent and 16.5 percent of sticker price, respectively, while Scion and Porsche spent the least at 0.6 percent and 1.5 percent, respectively.

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 Inc. (http://www.edmunds.com/about/)
Edmunds Inc. publishes three Web sites that empower, engage and educate automotive consumers and enthusiasts. 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 January 2005 and is the most-read automotive enthusiast Web site. CarSpace launched in February 2006 and is an automotive lifestyle social networking Web site for anyone with an interest in automobiles. The company is headquartered in Santa Monica, California, and maintains a satellite office in suburban Detroit.

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