Edmunds.com Reports True Cost of Incentives for November: Automaker Spending Flat Despite — and Perhaps Contributing to — Soft Sales

Edmunds.com Reports True Cost of Incentives for November: Automaker Spending Flat Despite — and Perhaps Contributing to — Soft Sales


FOR IMMEDIATE RELEASE

Edmunds.com Reports True Cost of Incentives for November: Automaker Spending Flat Despite — and Perhaps Contributing to — Soft Sales

SANTA MONICA, Calif. — December 3, 2007 — Edmunds.com, the premier online resource for automotive information, estimated today that the average automotive manufacturer incentive in the U.S. was $2,309 per vehicle sold in November 2007, up $135, or 6.2 percent, from October 2007, and up $21, or 0.9 percent, from November 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 $3,188 per vehicle sold in November 2007, up from $3,104 in October 2007. From October to November, European automakers increased incentives spending by $442 to $2,415 per vehicle sold; Japanese automakers increased incentives spending by $147 to $1,162 per vehicle sold; and Korean automakers increased incentives spending by $484 to $2,017 per vehicle sold.

In November, the industry's aggregate incentive spending is estimated to have totaled approximately $2.77 billion, up 3.75 percent from October. Chrysler, Ford and General Motors spent an aggregate of $1.89 billion, or 68.5 percent of the total; Japanese manufacturers spent $527 million, or 19.1 percent; European manufacturers spent $235 million, or 8.5 percent; and Korean manufacturers spent $108 million, or 3.9 percent.

True Cost of Incentives for the "Big Six" Automakers
Automaker November 2007 October 2007 November 2006
Chrysler Group $3,360 $3,105 $4,112
Ford $3,191 $3,205 $3,470
General Motors $3,136 $3,058 $2,661
Honda $865 $639 $499
Nissan $2,113 $2,070 $2,056
Toyota $888 $706 $857

"Even with the year-end sell-down upon us, the domestic automakers have stayed committed to the value pricing strategy that limits their investment in incentives," stated Jesse Toprak, Executive Director of Industry Analysis for Edmunds.com. "Chrysler and Ford are spending far less per vehicle than they were this time last year. GM is spending even less than them, though it not matching its remarkably low incentive average of last November. As usual, the domestics are keeping a close eye on each others' moves in order to maximize profit margins while maintaining competitiveness."

Among vehicle segments, large trucks had the highest average incentives, $3,885 per vehicle sold, followed by large SUVs at $3,616. Compact cars had the lowest average incentives per vehicle sold, $946, followed by sport cars at $1,232. Analysis of incentives expenditures as a percentage of average sticker price for each segment shows large cars averaged the highest, 12.5 percent, followed by large trucks at 12.2 percent of sticker price. Luxury sports cars averaged the lowest, 3.8 percent, followed by sports cars at 4.2 percent of sticker price.

"According to our analysis, the minivan segment experienced a 38 percent drop in incentives compared to last year — the biggest decline of all segments," commented Edmunds' AutoObserver.com Senior Editor Michelle Krebs. "Surprising, but not when one realizes that last year's most heavily incentivized minivan models are no longer being sold, and the ones on dealer lots today are relatively new models that are enjoying sustained launch buzz. However, this segment has been weakening in recent months, so higher incentives may be in store."

Comparing all brands, in November Mini spent the least — virtually nothing — followed by Scion at $118 per vehicle sold. At the other end of the spectrum, Cadillac spent the most, $6,200, followed by Saab at $5,940 per vehicle sold. Relative to their vehicle prices, Saab and Mercury spent the most, 17.6 percent and 16.1 percent of sticker price, respectively, while Mini spent virtually nothing and Scion spent just 0.7 percent.

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 and home to the oldest and most established automotive community. 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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