Edmunds.com Reports True Cost of Incentives for January: Most Manufacturers Spent Less on Incentives, Except on Large Cars

Edmunds.com Reports True Cost of Incentives for January: Most Manufacturers Spent Less on Incentives, Except on Large Cars


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Edmunds.com Reports True Cost of Incentives for January: Most Manufacturers Spent Less on Incentives, Except on Large Cars

SANTA MONICA, Calif. — February 1, 2007 — Edmunds.com, the premier online resource for automotive information, estimated today that the average automotive manufacturer incentive in the U.S. was $2,276 per vehicle sold in January 2007, down $96, or four percent, from December 2006, and down $149, or six percent, from January 2006.

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.

"The industry average fell largely due to GM's drop of 17 percent and Chrysler's drop of eight percent compared with last year, which more than offset Ford's 20 percent increase in incentives spending," stated Jesse Toprak, Executive Director of Industry Analysis for Edmunds.com. "As for the Japanese automakers, Nissan incentives are down 13 percent and Toyota incentives are down five percent year-over-year, while Honda incentives rose 38 percent. Honda's increase is dramatic, but didn't affect the industry average much since that automaker's TCI is still the lowest of the volume automakers."

In January, the industry's aggregate incentive spending is estimated to have totaled approximately $2.6 billion, down from $3.4 billion in December. Chrysler, Ford and General Motors spent an aggregate of $1.8 billion, or 69 percent of the total; Japanese manufacturers spent $508 million, or 19 percent; European manufacturers spent $227 million, or nine percent; and Korean manufacturers spent $90 million, or three percent.

According to Edmunds.com, combined incentives spending for domestic manufacturers averaged $3,062 per vehicle sold in January, down from $3,285 in December 2006. From December to January, European automakers increased incentives spending by $33 to $2,632 per vehicle sold; Japanese automakers increased incentives spending by $42 to $1,202 per vehicle sold; and Korean automakers increased incentives spending by $288 to $1,656 per vehicle sold.

True Cost of Incentives for the "Big Six" Automakers
Automaker January 2007 December 2006 January 2006
Chrysler Group $3,853 $4,220 $4,191
Ford $3,502 $3,819 $2,826
General Motors $2,365* $2,405 $2,838
Honda $854 $477 $574
Nissan $1,730 $1,748 $2,124
Toyota $1,234 $1,393 $1,275

*GM's lowest TCI since April 2002

Among vehicle segments, large trucks had the highest average incentives, $3,606 per vehicle sold, followed by large SUVs at $3,574. Compact cars had the lowest average incentives per vehicle sold, $929, followed by sports cars at $992. Analysis of incentives expenditures as a percentage of average sticker price for each segment shows minivans averaged the highest, 12.2 percent, followed by large trucks at 11.6 percent of sticker price. Luxury sport cars averaged the lowest, 2.1 percent, followed by sports cars at 3.4 percent of sticker price.

"It's also worth noting that the incentives for the large car segment is projected to jump 45 percent compared with January 2006, yet we expect that segment's market share to drop by nearly 13 percent because the models are relatively old and unappealing," stated Toprak. "In contrast, the compact car and compact SUV segments each are projected to grow by 10 percent year-over-year thanks to compelling new products and consumer interest in fuel efficiency."

Comparing all brands, in January Scion spent the least, $69, followed by Porsche at $543 per vehicle sold. At the other end of the spectrum, Cadillac spent the most, $5,308, followed by Mercury at $4,815 per vehicle sold. Relative to their vehicle prices, Mercury and Jeep spent the most, 17.8 percent and 17.2 percent of sticker price, respectively, while Scion and Porsche spent the least at 0.4 percent and 0.8 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 (http://www.edmunds.com/about/)
Edmunds 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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