Edmunds.com Reports True Cost of Incentives for September: Incentives Low as Automakers Hold Fast to "Value Pricing" Strategy

Edmunds.com Reports True Cost of Incentives for September: Incentives Low as Automakers Hold Fast to "Value Pricing" Strategy


FOR IMMEDIATE RELEASE

Edmunds.com Reports True Cost of Incentives for September: Incentives Low as Automakers Hold Fast to "Value Pricing" Strategy

SANTA MONICA, Calif. — October 2, 2007 — Edmunds.com, the premier online resource for automotive information, estimated today that the average automotive manufacturer incentive in the U.S. was $2,293 per vehicle sold in September 2007, down $176, or 7.1 percent, from August 2007, and down $267, or 10.4 percent, from September 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 $3,156 per vehicle sold in September 2007, down from $3,354 in August 2007. From August to September, European automakers decreased incentives spending by $124 to $2,815 per vehicle sold; Japanese automakers decreased incentives spending by $155 to $1,127 per vehicle sold; and Korean automakers decreased incentives spending by $26 to $1,783 per vehicle sold.

"Some may have thought that this soft market would inspire the automakers to increase their incentives to boost sales, but that isn't happening," stated Jesse Toprak, Executive Director of Industry Analysis for Edmunds.com. "Actually, many automakers seem determined to stay true to the 'value pricing' strategy that sets MSRPs closer to expected transaction prices. Even though this eliminates generous incentives offers that sometimes catch consumers' eyes, the strategy protects automakers from regularly sending the brand-damaging message that their vehicles are always on sale."

In September, the industry's aggregate incentive spending is estimated to have totaled approximately $2.95 billion, down 18.8 percent from August. Chrysler, Ford and General Motors spent an aggregate of $2.06 billion, or 69.4 percent of the total; Japanese manufacturers spent $547 million, or 18.5 percent; European manufacturers spent $248 million, or 8.4 percent; and Korean manufacturers spent $110 million, or 3.7 percent.

"The currency exchange rate plays a role in the incentives game," commented Edmunds' AutoObserver.com Senior Editor Michelle Krebs. "For example, our analysts have determined that European automakers have offered more generous incentives to American consumers since the Euro gained strength against the dollar."

True Cost of Incentives for the "Big Six" Automakers
Automaker September 2007 August 2007 September 2006
Chrysler Group $3,502 $3,769 $4,211
Ford $3,074 $3,139 $4,036
General Motors $3,089 $3,329 $2,988
Honda $991 $1,102 $781
Nissan $2,015 $2,304 $2,531
Toyota $802 $887 $878

Among vehicle segments, large trucks had the highest average incentives, $4,036 per vehicle sold, followed by large SUV's at $4,018. Compact cars had the lowest average incentives per vehicle sold, $795, followed by sport cars at $1,100. Analysis of incentives expenditures as a percentage of average sticker price for each segment shows large trucks averaged the highest, 12.8 percent, followed by large cars at 11.2 percent of sticker price. Sport cars averaged the lowest, 3.7 percent, followed by luxury sport cars at 4.1 percent of sticker price.

Comparing all brands, in September Mini spent the least — virtually nothing, followed by Scion at $118 per vehicle sold. At the other end of the spectrum, Saab spent the most, $5,792, followed by Cadillac at $5,698 per vehicle sold. Relative to their vehicle prices, Saab and Jeep spent the most, 17.4 percent and 13.4 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.

Leave a Comment

Media Contacts

Nicole Carriere
Public Relations Director
ncarriere@edmunds.com
770.547.7950 m


Leah Polk
Senior Public Relations Manager, Product
lpolk@edmunds.com
202.213.4464 m | 310.309.6114 o


Talia James
Public Relations Manager
tjames@edmunds.com
310.309.6336 o


General Inquiries
PR@Edmunds.com
310.309.4900 o