Automakers' True Cost of New Car Incentives

SANTA MONICA, Calif., Oct. 29, 2003 -- Edmunds.com (http://www.edmunds.com/), the premier online resource for automotive information, reported today that the average manufacturer incentive per vehicle sold in the United States was $2,622 in September 2003, up $596 or 29.4% from September 2002, but down 0.3% from August 2003.

"Looking forward, we expect continued stabilization in incentives spending since the new 2004 models -- at least initially -- appeal to consumers without generous financial offers," stated Dr. Jane Liu, Executive Director of Data Analysis for Edmunds.com.

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.

Incentives spending for domestic Chrysler, Ford and General Motors nameplates decreased on a month-to-month basis for the first time in 2003, falling 1.9% to $3,618 per unit in September. General Motors reduced incentives spending by 5.3% to $3,812 per vehicle, and lost 0.9% market share. Chrysler reduced incentives spending by 3.6% to $3,078 per vehicle while its market share decreased by 0.4%. Ford increased incentives spending by 5.3% to $3,655 per unit and saw its market share increase by 3.2%, reaching 20.8% -- its highest level since September 2002.

In comparison, imports continue to spend far less on incentives: European automakers spent $1,753, Korean automakers spent $1,384, and Japanese automakers spent $965 per vehicle sold.

Among vehicle segments, large SUVs had the highest average incentives at $4,142, followed by large cars at $3,383 and large trucks at $3,255. Sports cars had the lowest average incentives at $1,327, followed by compact SUVs at $1,487 and compact cars at $1,790. Large trucks have gained the most market share since September 2002, up 2.0% to 14.8%, while compact cars have lost the most market share during that period, down 2.7% to 14.0%.

Industry average 'days-to-turn,' which measures how many days on average it takes to sell a vehicle after it hits the dealer's lot, reached a record level of 75 days in September, compared to 62 days last September. Mitsubishi had the longest days-to-turn at 129, followed by Saturn at 122. The quickest inventory turnaround was for Lexus at 17 days, followed by Mini at 19 days.