Model Year-End Clearance Incentives Drive July Sales, Reports

By Michelle Krebs August 3, 2010

Model year-end clearance sales that kicked off earlier this year than last drove vehicle sales to their highest level since last summer's Cash for Clunkers frenzy, according to

The average incentive was $2,753 per vehicle sold in July, up $63, or 2.3 percent, from June 2010, and up $67, or 2.5 percent, from July 2009, according to Edmunds' analysis.

Edmunds July sales forecast calls for the U.S. industry to have its best month since last summer when the government's Cash for Clunkers program was in full swing -- it kicked off at the end of July, reached a fever pitch in early to mid-August and ended Aug. 31. Edmunds predicts July sales, being reported today, will hit a Seasonally Adjusted Annualized Rate (SAAR) of 11.8 million vehicles.

"This year, seasonal incentives started earlier than in year's past, which really helped boost incentives and picked up sales this month," said Jessica Caldwell, Edmunds' director of Industry Analysis for "Typically, August is when manufacturers really start to push previous year models off dealership lots."

Automakers had varied strategies in their model-year end clearances. Nissan stood out in July as the biggest spender, much of it on leases. Nissan had its highest lease percentage ever, according to's analysis. In contrast, GM used more dealer cash than usual to sweep older models out of inventory.


In July, the industry in total spent an estimated $2.93 billion on incentives, up 11 percent from June 2010.


Chrysler, Ford and General Motors spent a combined $1.7 billion, or 57.3 percent of the total; Japanese manufacturers spent $882 million, or 30.0 percent; European manufacturers spent $223 million, or 7.6 percent; and Korean manufacturers spent $150 million, or 5.1 percent. 


Among vehicle segments, premium sport cars had the highest average incentives of $5,648 per vehicle sold, followed by large trucks at $4,574.


Sport cars had the lowest average incentives per vehicle sold, $1,411, followed by subcompact cars at $1,525.


Analysis of incentives expenditures as a percentage of average sticker price for each segment shows large cars averaged the highest, 13.5 percent, followed by large trucks at 12.4 percent of sticker price. Premium luxury cars averaged the lowest with 3.5 percent and sport cars followed with 3.9 percent of sticker price.


Comparing all brands, in July Subaru spent the least, $563 followed by Scion at $654 per vehicle sold.


At the other end of the spectrum, Saab spent the most, $6,822, followed by Cadillac at $5,790 per vehicle sold. Relative to their vehicle prices, Saab and Mercury -- which is being discontinued by year-end -- spent the most, 17.5 percent and 15.7 percent of sticker price, respectively; while Subaru spent 2.2 and Porsche spent 2.7 percent.


Edmunds July 2010 TCI.gif's monthly True Cost of Incentives (TCI) 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.



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