Edmunds.com Reports True Cost of Incentives, Predicts Rising Gas Prices Will Lead Automakers to Boost Incentives on Large SUVs and Trucks

Edmunds.com Reports True Cost of Incentives, Predicts Rising Gas Prices Will Lead Automakers to Boost Incentives on Large SUVs and Trucks


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Edmunds.com Reports True Cost of Incentives, Predicts Rising Gas Prices Will Lead Automakers to Boost Incentives on Large SUVs and Trucks

SANTA MONICA, Calif. — May 2, 2006 — Edmunds.com, the premier online resource for automotive information, reported today that the average automotive manufacturer incentive in the U.S. was $2,367 per vehicle sold in April 2006, down $154, or six percent, from March 2006, and down $67, or nearly three percent, from April 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 $3.39 billion in April, down from $3.85 billion in March. Chrysler, Ford and General Motors spent an aggregate of $2.38 billion, or 70 percent of the total; Japanese manufacturers spent $613 million, or 18 percent; European manufacturers spent $279 million, or eight percent; and Korean manufacturers spent $119 million, or four percent.

"Last April, before the 'value pricing' initiative came into full effect and moderated domestic incentives, domestic automakers were responsible for 77 percent of incentives spending, a notable difference compared with this year," remarked Dr. Jane Liu, Vice President of Data Analysis for Edmunds.com. "Last year, incentives on Japanese vehicles were just 14 percent of the total and incentives on European vehicles were just five percent — both significantly lower than they are currently. Incentives on Korean vehicles were the same as they are now — four percent of the total spend."

According to Edmunds.com, combined incentives spending for domestic manufacturers averaged $3,050 per vehicle sold in April, down from $3,230 in March 2006. Chrysler's incentives spending was down $364 to $3,675 per vehicle sold; Ford's incentives spending was up $6 to $3,264 per vehicle sold; and General Motors decreased its incentives by $192 to $2,525 per vehicle sold.

From March to April, European automakers decreased incentives spending by $125 to $2,842 per vehicle sold; Japanese automakers decreased incentives spending by $97 to $1,257 per vehicle sold; and Korean automakers decreased incentives spending by $180 to $1,815 per vehicle sold.

Comparing all brands, in April Scion spent the least, $74, followed by Porsche at $469 per vehicle sold. At the other end of the spectrum, Lincoln spent the most, $6,859, followed by Jaguar at $6,565 per vehicle sold. Relative to their vehicle prices, Mercury and Jeep spent the most, 17.2 percent and 16.4 percent of sticker price, respectively, while Scion and Porsche spent the least at 0.5 percent and 0.7 percent, respectively.

Among vehicle segments, large SUVs continued to have the highest average incentives, $4,925 per vehicle sold, followed by large trucks at $3,613. Sport cars had the lowest average incentives per vehicle sold, $765, followed by compact cars at $948. Analysis of incentives expenditures as a percentage of average sticker price for each segment shows large SUVs averaged the highest, 12.9 percent, followed by large trucks at 11.7 percent of sticker price. Sports cars averaged the lowest, 2.8 percent, followed by compact cars at 5.6 percent of sticker price.

"We anticipate that large SUVs and trucks will need increasingly more generous incentives as gas prices inevitably continue their seasonal climb," predicted Dr. Liu.

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.com, Inc.
Edmunds.com is the premier online resource for automotive information. Its comprehensive set of data, tools and services is generated by Edmunds.com Information Solutions and is licensed to third parties and used by over 15,000 cars dealers including 98 of the 100 dealers named to the Ward's Dealer Business "e-Dealer 100" list. Perhaps the most popular consumer product, Edmunds.com True Market Value® pricing, is relied upon by millions of people seeking market-reflective valuations for new and used vehicles. The company also 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. In addition, Edmunds.com publishes Inside Line (), a free high-speed online magazine for auto enthusiasts, and CarSpace (www.carspace.com), an automotive lifestyle social networking Web site for anyone with an interest in automobiles. 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 number one in Keynote's study of third-party automotive web sites. The company is headquartered in Santa Monica, California, and maintains a satellite office in suburban Detroit.

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