Edmunds.com Reports True Cost of Incentives: Surge of Small Car Sales Reduces Average Automaker Spend
SANTA MONICA, Calif. — April 1, 2011 — Edmunds.com, the premier online resource for automotive information, estimated today that the average automotive manufacturer incentive in the U.S. was $2,346 per new car sold in March 2011, down $469 — or 16.7 percent — from March 2010, and down $220 — or 8.6 percent — from February 2011.
"These latest numbers show by far the biggest February-to-March incentives decline since Edmunds.com started tracking in 2002," said Ivan Drury, analyst at Edmunds.com. "The decline is mostly likely a result of a 26% month-over-month sales jump in subcompact and compact cars which typically have a much lower level of incentives compared to large trucks and SUVs."
According to Edmunds.com, combined incentives spending for domestic manufacturers averaged $3,043 per vehicle sold in March 2011, down from $3,353 in February 2011. From February 2011 to March 2011, European automakers increased incentives spending by $208 to $1,937 per vehicle sold; Japanese automakers decreased incentives spending by $106 to $1,938 per vehicle sold; and Korean automakers decreased incentives spending by $132 to $1,201 per vehicle sold.
|True Cost of Incentives for the Top Six Automakers|
|Automaker||March 2011||February 2011||March 2010|
|Chrysler Group (Chrysler, Dodge, Fiat, Jeep)||$2,985||$3,191||$3,300|
|Ford (Ford, Lincoln)||$2,913||$2,778||$3,350|
|General Motors (Buick, Cadillac, Chevrolet, GMC)||$3,202||$3,845||$3,502|
|Honda (Acura, Honda)||$1,729||$1,504||$1,787*|
|Nissan (Infiniti, Nissan)||$2,371||$2,797||$2,389|
|Toyota (Lexus, Scion, Toyota)||$2,016||$2,112||$2,773*|
In March 2011, the industry's aggregate incentive spending is estimated to have totaled approximately $2.9 billion, up 14.4 percent from February 2011. Chrysler, Ford and General Motors spent an aggregate of $1.6 billion, or 55.4 percent of the total; Japanese manufacturers spent $966 million, or 33.1 percent; European manufacturers spent $210 million, or 7.2 percent; and Korean manufacturers spent $125 million, or 4.3 percent.
"The hefty — and costly — incentives from GM in the first two months of the year fell back to Earth in March, and that translated to lackluster retail sales," said Edmunds.com Director of Industry Analysis Jessica Caldwell. "The industry will be carefully watching GM's performance this month to see if March was an aberration or the start of a downward trend."
Among vehicle segments, large cars had the highest average incentives, $4,619 per vehicle sold, followed by premium luxury cars at $3,875. Subcompact cars had the lowest average incentives per vehicle sold, $1,055 followed by sport cars at $1,567. Analysis of incentives expenditures as a percentage of average sticker price for each segment shows large cars averaged the highest, 14.6 percent, followed by large trucks at 9.7 percent of sticker price. Premium sport cars averaged the lowest with 3.3 percent and luxury SUVs followed with 3.7 percent of sticker price.
Comparing all brands, smart spent the least in March at $453 per vehicle sold , followed by Subaru at $532. At the other end of the spectrum, Saab spent the most ($6,238) followed by Lincoln at $4,468 per vehicle sold. Relative to their vehicle prices, Saab and Chrysler spent the most at 15.9 percent and 12.6 percent of sticker price, respectively. Porsche, meanwhile, spent the least at 1.2 percent, followed by Subaru at 2.0 percent.
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.
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Edmunds.com Inc. publishes Web sites that empower, engage and educate automotive consumers, enthusiasts and insiders. Edmunds.com, the premier online resource for automotive information, launched in 1995 as the first automotive information Web site and hosts the most established automotive community online. Its mobile site, accessible from any smartphone at www.edmunds.com, makes car pricing and other research tools available for car shoppers at dealerships and otherwise on the go. InsideLine.com is the most-read automotive enthusiast Web site. Its mobile site, accessible from any smartphone at www.insideline.com, features the wireless Web's highest quality car photos and videos. AutoObserver.com provides insightful automotive industry commentary and analysis. Edmunds.com Inc. is headquartered in Santa Monica, California, and maintains a satellite office in suburban Detroit. Follow Edmunds.com on Twitter@edmunds and fan Edmunds.com on Facebook at http://www.facebook.com/edmunds.