Edmunds.com Reports True Cost of Incentives: Incentive Spending Down in August for Most Domestic Nameplates

Edmunds.com Reports True Cost of Incentives: Incentive Spending Down in August for Most Domestic Nameplates

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Edmunds.com Reports True Cost of Incentives: Incentive Spending Down in August for Most Domestic Nameplates

SANTA MONICA, Calif. — September 1, 2006 — Edmunds.com, the premier online resource for automotive information, estimated today that the average automotive manufacturer incentive in the U.S. was $2,390 per vehicle sold in August 2006, down $420, or 15 percent, from July 2006, and down $221, or nearly nine percent, from August 2005.

"This is a significant drop, but it is not unusual for incentive spending to decline in August," remarked Dr. Jane Liu, Vice President of Data Analysis for Edmunds.com. "By late summer, new model year vehicles take up a greater proportion of sales, and they typically require significantly lower incentives than the older models. This year, new model year vehicles made up nearly 22 percent of August sales — an increase of seven percent compared to August 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.

The industry's aggregate incentives spending is estimated to have totaled approximately $3.6 billion in August, down 14.2 percent from $4.2 billion in July. Chrysler, Ford and General Motors (GM) spent an aggregate of $2.4 billion, or 68 percent of the total; Japanese manufacturers spent $713 million, or 20 percent; European manufacturers spent $307 million, or nine percent; and Korean manufacturers spent $127 million, or three percent.

According to Edmunds.com, combined incentives spending for domestic manufacturers averaged $3,135 per vehicle sold in August, down from $3,959 in July 2006. Compared with last month, Chrysler's incentives spending was up $245 to $2,868 per vehicle sold; Ford's incentives spending was down $534 to $3,330 per vehicle sold; and General Motors decreased its incentives by $1,364 to $3,133 per vehicle sold.

From July to August, European automakers decreased incentives spending by $32 to $3,001 per vehicle sold; Japanese automakers increased incentives spending by $15 to $1,311 per vehicle sold; and Korean automakers increased incentives spending by $26 to $1,723 per vehicle sold.

Comparing all brands, in August Scion spent the least, $74, followed by Porsche at $538 per vehicle sold. At the other end of the spectrum, Jaguar spent the most, $8,447, followed by Cadillac at $5,551 per vehicle sold. Relative to their vehicle prices, Jaguar and Mercury spent the most, 15.4 percent and 14.9 percent of sticker price, respectively, while Scion and Porsche spent the least at 0.5 percent and 0.8 percent, respectively.

Among vehicle segments, large SUVs had the highest average incentives, $4,760 per vehicle sold, followed by large trucks at $4,132. Compact cars had the lowest average incentives per vehicle sold, $720, followed by sports cars at $891. Analysis of incentives expenditures as a percentage of average sticker price for each segment shows large trucks averaged the highest, 13.5 percent, followed by large SUVs at 12.5 percent of sticker price. Luxury sport cars averaged the lowest, 3.0 percent, followed by sports cars at 3.3 percent of sticker price.

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
Edmunds.com publishes three Web sites that empower, engage and educate automotive consumers and enthusiasts. Edmunds.com, the premier online resource for automotive consumer information and 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 StudySM, 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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