All-Time Record Incentives Likely Cause of Strong Sales in September; Domestics Gain Market Share While Honda, Toyota and Lexus Slip

SANTA MONICA, Calif., Oct. 6, 2004 -- Edmunds.com (http://www.edmunds.com/), the premier online resource for automotive information, reported today that the average manufacturer incentives per vehicle sold in the United States was $3,146 in September 2004, up $425 or 15.6% from August 2004, and up $524 or 20.0% from September 2003. This is the highest industry average since Edmunds began tracking manufacturer incentives in January 2002, and Edmunds.com's experts believe incentives have never been higher.

Edmunds.com's monthly True Cost of Incentives(SM) (TCI(SM)) report takes into account all of the manufacturers' various United States 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.

Overall, combined incentives spending for domestic Chrysler, Ford and General Motors nameplates was $4,279 per vehicle sold in September 2004, up $428 from August 2004 and up $661 from September 2003. Chrysler increased incentives spending from $384 to $3,778 per vehicle while losing 0.7% market share since August 2004. Ford increased its incentives by $74 per vehicle, setting a new Ford record TCI of $4,048, and gained 0.8% market share. GM increased overall incentives by $612, setting a new GM record TCI of $4,593 per vehicle and gained 3.4% market share.

"The domestics are focused on clearing out 2004 model year vehicles, and their use of dramatic incentives have been quite effective," said Dr. Jane Liu, Vice President of Data Analysis for Edmunds.com. "Domestic market share is climbing; they gained an impressive 3.5% last month to reach the highest level this year, 61.2%, and are 1.7% ahead of where they were this time last year. Chevrolet in particular experienced a tremendous sales month in September, likely because of attractive deals that enticed customers without destroying the bottom line or the image of their reinvigorated product line."

In September 2004, European automakers spent $2,497 per vehicle sold, $744 higher than September 2003 but $324 less than August 2004, and lost 1.2% market share. Japanese automakers spent $911, $54 less than September 2003 but $49 more than August 2004, and lost 0.6% market share. Korean automakers spent $2,207, $823 more than September 2003 and $325 more than August 2004, and gained 0.1% market share.

Of all brands, Mini spent the least on incentives in September, $13 per vehicle sold, while Scion spent only $89 and Acura spent just $251. At the other end of the spectrum, Cadillac spent the most on incentives, $6,281 per vehicle sold, followed by Lincoln at $5,566 and Mercury at $5,434.

Last month Chevrolet gained the most market share, growing from 17.0% in August 2004 to 19.7%, while GMC rose from 3.5% to 4.3% and Ford climbed from 15.4% to 16.1%. Pontiac and Lincoln also experienced noteworthy gains. During the same period, the Honda brand lost the most market share, dropping from 7.7% to 6.5%, while Toyota fell from 10.0% to 9.2% and Lexus slipped from 1.8% to 1.4%.

"Thanks to incentives, the top five market share gainers last month are domestic while the three with the biggest declines are Japanese," observed Dr. Liu.

Among vehicle segments, large SUVs offered the highest average incentives for the sixth straight month, $5,196 per vehicle, a new market segment TCI record. Other segments with high incentives were large trucks at $4,053 and large cars at $3,838. Compact cars had the lowest average incentives at $1,783, followed by compact SUVs at $2,018 and luxury sport cars at $2,084. Large trucks gained the most market share, up from 15.6% in August 2004 to 17.8% in September 2004, while large SUVs went from 5.6% to 6.7%. By contrast, compact cars fell from 14.9% to 13.6% and midsize cars dropped from 15.9% to 14.8%.

"The bargain-hunters were clearly all over dealership lots in September, responding in droves to the most generous incentives," stated Dr. Liu.

About Edmunds.com True Cost of Incentives(SM) (TCI(SM))

Edmunds.com's TCI(SM) 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.