2010 Incentives Return to Lower 2008 Levels, Edmunds.com

By Michelle Krebs January 4, 2011

Car sales - 185.JPGAfter surging in 2009 as manufacturers tried anything they could think of to lure customers to buy their vehicles, incentives have dropped back to pre-recession levels, but with some shifts, according to Edmunds.com's analysis.

Incentive spending by U.S., Korearn and European automakers was down in 2010 compared with the year earlier, while spending by Japanese automakers, led by Toyota as it tried to recoup from recalls that triggered a sales slump, rose, even though Japanese automakers still spend the least on incentives.

In December, Edmunds.com estimates the average incentives was up from November as automakers attempted to close the year on a high note, but were down from December a year ago.

December By the Numbers

Edmunds.com estimates the average incentives $2,528 per vehicle sold in December, up $64, or 2.6 percent, from November but down $26, or 1.0 percent, from December 2009.

December incentives Big 6 - 549.JPG

By Region

From November to December, combined incentives spending by region of origin showed:

- domestic manufacturers spent an average $3,301 per vehicle sold in December, up from $3,215 in November;

- European automakers spent an average $2,376 per vehicle, up $18 per vehicle from November;

- Korean automakers spent an average of $1,508, down $118 from November;

-  Japanese automakers increased incentives spending by $34 to $1,821 per vehicle sold.

December incentives by region - 548.JPG

The industry's aggregate incentive spending is estimated to have totaled approximately $2.85 billion, up 32.9 percent from November. Chrysler, Ford and General Motors spent an aggregate of $1.7 billion, or 59.7 percent of the total; Japanese manufacturers spent $774 million, or 27.2 percent; European manufacturers spent $250 million, or 8.8 percent; and Korean manufacturers spent $125 million, or 4.4 percent.

December incentives by region - pie chart - 356.JPG
By Segment

Among vehicle segments, premium sport cars had the highest average incentives, $5,757 per vehicle sold, followed by large cars at $4,686.

Subcompact cars had the lowest average incentives per vehicle sold, $1,212 followed by vans at $1,737.

Analysis of incentives expenditures as a percentage of average sticker price for each segment shows large cars averaged the highest, 14.7 percent, followed by large trucks at 10.3 percent of sticker price. Premium luxury cars averaged the lowest with 3.3 percent and luxury SUVs followed with 4.3 percent of sticker price.

By Brand

Comparing all brands, in December Subaru spent the least, $522 followed by Scion at $881 per vehicle sold.

At the other end of the spectrum, Saab spent the most, $7,998, followed by Mercury, which was being phased out by year-end 2010, at $6,448 per vehicle sold.

Relative to their vehicle prices, Mercury and Saab spent the most, 21.6 percent and 19.3 percent of sticker price, respectively; while Porsche spent 1.6 and Subaru spent 2.0 percent.

2010 By the NumbersAverage incentives for 2010 - 323.PNGWhile Japanese brands remained the lowest in average incentive spending with $1,968 per car sold this year, it was still a notable increase from the $1,637 spent per car last year.
U.S. makes averaged $3,333 in incentives per car sold versus $3,766 in 2009, while Korean brands averaged $1,820, down from $2,721 last year.

The European makes had the greatest decline in incentives, averaging $2,491 in spending per car, down from $3,295 in 2009.

December incentives for 3 years Big 6 - 546.JPGEdmunds.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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