Edmunds.com Reports True Cost of Incentives: November Incentives Climb to Record Levels

Edmunds.com Reports True Cost of Incentives: November Incentives Climb to Record Levels


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Edmunds.com Reports True Cost of Incentives: November Incentives Climb to Record Levels

SANTA MONICA, Calif. — December 1, 2005 — Edmunds.com, the premier online resource for automotive information, reported today that the average automotive manufacturer incentive in the U.S. was $2,413 per vehicle sold in November 2005 (the highest for any November), up $18, or one percent from November 2004, and up $401, or 20 percent, from October 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.

"Domestic manufacturers chose to get back into the incentives game full-force in the latter part of November after a significant sales slowdown resulted in record low market share in October," remarked Dr. Jane Liu, vice president of data analysis for Edmunds.com. "The recent round of new promotions reflects the ineffectiveness of their attempts at 'value pricing,' and again demonstrates consumers" preference for discounts and promotions, especially for certain models."

The industry's aggregate incentives spending is estimated to have totaled $3 billion in November, up from $2.3 billion in October. Chrysler, Ford and General Motors spent an aggregate of $2.3 billion, or 77 percent of the total; Japanese manufacturers spent $427 million, or 14 percent; European manufacturers spent $172 million, or six percent; and Korean manufacturers spent $92 million, or three percent.

Based on Edmunds.com data, combined incentives spending for domestic manufacturers averaged $3,398 per vehicle sold in November — a record for the month of November — up $609 from October 2005. All domestic nameplates increased incentives spending in November: Chrysler's incentives spending was up $882 to $3,922 per vehicle sold; Ford's incentives spending was up $452 to $3,137 in November; and General Motors increased its incentives in November by $556 to $3,255.

From October to November of this year, European automakers decreased incentives spending by $11 to an average of $1,884 per vehicle sold; Japanese automakers also increased incentives spending by $80 to $1,030; and Korean automakers decreased incentives spending by $6 to an average of $1,724 per vehicle sold.

Comparing all brands in November, Mini was the only brand that spent no money on incentives while Scion spent $96 and Porsche spent $333 per vehicle sold. At the other end of the spectrum, Jaguar spent the most, $7,222, followed by Lincoln at $5,171 and Buick at $4,133 per vehicle sold. Dodge and Buick spent the most as a percentage of MSRP for their brands at 14.5 percent and 14.3 percent, respectively, while Mini spent nothing and Porsche 0.4 percent.

Among vehicle segments, large SUVs continued to offer the highest average incentives, $5,540 per vehicle sold, while sports cars had the lowest average incentives per vehicle at $645 and compact cars followed closely at $869 per vehicle. Analysis of incentives expenditures as a percentage of MSRP for each segment shows large SUVs were the highest, 13.2 percent, while sports cars were the lowest at 2.1 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, About.com and IGN.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 Study SM , and was ranked first in the Survey of Car-Shopping Web Sites by The Wall Street Journal. The company is headquartered in Santa Monica , Calif. and maintains a satellite office in suburban Detroit.

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