Incentives on Small Cars Continue to Plummet, Reports

Incentives on Small Cars Continue to Plummet, Reports

Incentives on Small Cars Continue to Plummet, Reports

SANTA MONICA, Calif. — May 31, 2011 — Increased demand in response to high gas prices — compounded by supply shortages — is making it harder to get an incentive-laden deal on a small car, according to, the premier online resource for automotive information. Edmunds' analysis of the True Cost of IncentivesSM found that manufacturer incentive spending for compact cars fell 23 percent in the last month, and incentives on subcompact cars fell 14 percent.

The decreases come even as average incentive spending across the entire industry fell just 0.7 percent in May to an average of $2,094 per vehicle sold. As reported last month, average incentives remain at their lowest levels since 2005. The industry's total aggregate incentive spending this month is estimated to have totaled approximately $2.3 billion, down 5.8 percent from April.

"The continuing market shift toward small fuel-efficient vehicles is keeping overall automaker incentives at the lowest levels we've seen in years," said Jessica Caldwell, director of industry analysis at "These low incentives are making it increasingly difficult for consumers to find good deals on small cars. But on the other end of the spectrum, we're seeing better offers on large vehicles that have taken a hit in demand."

Automaker Spending
The largest drop in incentive spending last month came from Honda, which is increasingly looking like the biggest victim of the March earthquake in Japan among all automakers. The company dropped its incentive spending 46 percent in May as prices of its top two models — the Civic and Accord — have each climbed more than a thousand dollars in the last two months. Overall, Japanese automakers decreased incentive spending $334 in May to $1,351 per vehicle sold.

"Interestingly, with the exception of Honda, we aren't seeing a huge pullback of incentive spending by the Japanese automakers, which may indicate that they're not quite as concerned about their supply as they were just weeks ago," said Caldwell. "Toyota's average incentive spend fell from April levels, but the company actually boosted incentive programs part way through May. And Nissan, in fact, increased its spend almost ten percent."

True Cost of IncentivesSM for the Top Six Automakers
Automaker May 2011 April 2011 % Change
Chrysler Group (Chrysler, Dodge, Fiat, Jeep) $2,433 $2,401 1.3%
Ford (Ford, Lincoln) $2,283 $2,341 -2.5%
General Motors (Buick, Cadillac, Chevrolet) $3,373 $3,015 11.9%
Honda (Acura, Honda) $907 $1,679 -46.0%
Nissan (Infiniti, Nissan) $2,006 $1,836 9.3%
Toyota (Lexus, Scion, Toyota) $1,269 $1,730 -26.6%
Industry Average $2,094 $2,109 -0.7%

Comparing all brands, smart spent the least per vehicle sold in May ($72), followed by Subaru at $365 per vehicle sold. At the other end of the spectrum, Saab spent the most, $5,137, followed by Cadillac at $4,714 per vehicle sold. Relative to their vehicle prices, Saab and Chevrolet spent the most, 13.0 percent and 11.0 percent of sticker price, respectively, while smart spent 0.4 and Porsche spent 1.2 percent.'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, 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.

About Edmunds (

Edmunds publishes Web sites that empower, engage and educate automotive consumers, enthusiasts and insiders., 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, makes car pricing and other research tools available for car shoppers at dealerships and otherwise on the go. is the most-read automotive enthusiast Web site. Its mobile site, accessible from any smartphone at, features the wireless Web's highest quality car photos and videos. provides insightful automotive industry commentary and analysis. Edmunds is headquartered in Santa Monica, California, and maintains a satellite office in suburban Detroit. Follow on Twitter@edmunds and fan on Facebook at

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