Edmunds.com Reports True Cost of Incentives for January: Incentives 7.5 Percent More Generous Than Last Year

Edmunds.com Reports True Cost of Incentives for January: Incentives 7.5 Percent More Generous Than Last Year


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Edmunds.com Reports True Cost of Incentives for January: Incentives 7.5 Percent More Generous Than Last Year

SANTA MONICA, Calif. — February 1, 2008 — Edmunds.com, the premier online resource for automotive information, estimated today that the average automotive manufacturer incentive in the U.S. was $2,401 per vehicle sold in January 2008, down $57, or 2.3 percent, from December 2007, and up $167, or 7.5 percent, from January 2007.

"In January, automakers decided to be more generous in their incentives spending in hopes of counteracting the slowdown in demand," stated Jesse Toprak, Executive Director of Industry Analysis for Edmunds.com. "We do not foresee a dramatic turnaround in market conditions for at least the next several months, and yet the race for increased market share is in full force. This will provide a test of the automakers' discipline about incentives, especially that the of the domestics who have been employing a 'value pricing' strategy quite successfully recently."

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 $3,384 per vehicle sold in January 2008, up from $3,254 in December 2007. From December to January, European automakers decreased incentives spending by $220 to $2,470 per vehicle sold; Japanese automakers decreased incentives spending by $6 to $1,266 per vehicle sold; and Korean automakers decreased incentives spending by $1,329 to $1,370 per vehicle sold.

In January, the industry's aggregate incentive spending is estimated to have totaled approximately $2.53 billion, down 25.7 percent from December. Chrysler, Ford and General Motors spent an aggregate of $1.76 billion, or 69.6 percent of the total; Japanese manufacturers spent $514 million, or 20.3 percent; European manufacturers spent $185 million, or 7.3 percent; and Korean manufacturers spent $71 million, or 2.8 percent.

True Cost of Incentives for the "Big Six" Automakers
Automaker Januar 2008 December 2007 January 2007
Chrysler Group $3,598 $3,283 $3,855
Ford $3,096 $2,919 $3,300
General Motors $3,402 $3,490 $2,454
Honda $989 $1,031 $947
Nissan $2,072 $2,054 $1,746
Toyota $1,019 $1,067 $763

"Our research indicates that the TCI record was set in September 2004, when automakers spent an average of $3,146 per vehicle sold," commented Edmunds' AutoObserver.com Senior Editor Michelle Krebs. "We don't expect to break that record this year because the large volumes of fuel-efficient cars being sold with minimal incentives will help to keep the average down."

Among vehicle segments, large trucks had the highest average incentives, $4,068 per vehicle sold, followed by large cars at $3,946. Compact cars had the lowest average incentives per vehicle sold, $1,070, followed by sports cars at $1,273. Analysis of incentives expenditures as a percentage of average sticker price for each segment shows large cars averaged the highest, 14.3 percent, followed by large trucks at 12.7 percent of sticker price. Luxury sports cars averaged the lowest, 2.9 percent, followed by sports cars at 4.2 percent of sticker price.

Comparing all brands, in January Mini spent the least — virtually nothing — followed by Scion at $160 per vehicle sold. At the other end of the spectrum, Saab spent the most, $6,212, followed by Cadillac at $6,158 per vehicle sold. Relative to their vehicle prices, Saab and Pontiac spent the most, 17.7 percent and 17.1 percent of sticker price, respectively, while Mini spent virtually nothing and Scion spent just 0.9 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. 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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