Edmunds.com Reports True Cost of Incentives: Industry Spent $3.5 Billion in December and $42.6 Billion on Incentives in 2005

Edmunds.com Reports True Cost of Incentives: Industry Spent $3.5 Billion in December and $42.6 Billion on Incentives in 2005


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Edmunds.com Reports True Cost of Incentives: Industry Spent $3.5 Billion in December and $42.6 Billion on Incentives in 2005

SANTA MONICA, Calif. — January 4, 2006 — Edmunds.com, the premier online resource for automotive information, reported today that the average automotive manufacturer incentive in the U.S. was $2,410 per vehicle sold in December 2005, up $26, or one percent from November 2005, and down $102, or four percent, from December 2004.

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 $3.5 billion in December, up from $2.8 billion in November. Chrysler, Ford and General Motors spent an aggregate of $2.7 billion, or 77 percent of the total; Japanese manufacturers spent $496 million, or 14 percent; European manufacturers spent $200 million, or six percent; and Korean manufacturers spent $92 million, or three percent.

The industry's aggregate incentives spending is estimated to have totaled $42.6 billion in 2005. Sales were essentially flat year over year.

"Interestingly, automakers spent $1.2 billion less on incentives in 2005 than they did in 2004," remarked Dr. Jane Liu, vice president of data analysis for Edmunds.com. "The downward trend may be sustainable if the investment continues to be targeted for effective use — and, of course, if the 2006 and 2007 model year vehicles appeal to consumers."

According to Edmunds.com, combined incentives spending for domestic manufacturers averaged $3,364 per vehicle sold in December, down $8 from November 2005. Chrysler's incentives spending was up $36 to $4,006 per vehicle sold; Ford's incentives spending was down $89 to $3,016 per vehicle sold; and General Motors increased its incentives by $7 to $3,207 per vehicle sold.

From November to December of this year, European automakers decreased incentives spending by $76 to an average of $1,950 per vehicle sold; Japanese automakers also increased incentives spending by $23 to $1,077 per vehicle sold; and Korean automakers decreased incentives spending by $274 to an average of $1,583 per vehicle sold.

Comparing all brands, in December Scion and Porsche spent the least, $91 and $278 per vehicle sold, respectively. At the other end of the spectrum, Jaguar spent the most, $7,039, followed by Lincoln at $4,969 and GMC at $4,641 per vehicle sold. Relative to their vehicle prices, Dodge and Jeep spent the most, 14.1 percent of sticker price, while Porsche spent the least, 0.4 percent, followed by Scion at 0.5 percent.

Among vehicle segments, large SUVs had the highest average incentives, $6,019 per vehicle sold. Sports cars had the lowest average incentives per vehicle, $547, while incentives on compact cars averaged just $946 per vehicle. Analysis of incentives expenditures as a percentage of average sticker price for each segment shows large SUVs were the highest, 14.1 percent, while sports cars were the lowest, 1.8 percent.

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 is the premier online resource for automotive information. Its comprehensive set of data, tools and services, including Edmunds.com True Market Value ® pricing, is generated by Edmunds.com Information Solutions and is licensed to third parties. The company supplies content for the auto sections of NYTimes.com, AOL, CNN.com and About.com; provides weekly data to Automotive News; and delivers monthly data reports to Wall Street analysts. Edmunds.com also publishes Inside Line (www.insideline.com), a free online magazine for auto enthusiasts. 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, and was ranked first in the Survey of Car-Shopping Web Sites by The Wall Street Journal. The company is headquartered in Santa Monica, California, and maintains a satellite office in suburban Detroit.

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