U.S. February vehicle incentives up slightly

DETROIT, March 3, 2004; Reuters reported that average spending by automakers on consumer incentives in the hypercompetitive U.S. market was up only slightly last month, an industry research group said on Wednesday.

Autodata said the average incentive from Detroit's traditional Big Three edged up to $3,919 per vehicle, a marginal increase of just over $100 from January.

Of the six largest automakers, General Motors Corp. once again offered the largest average incentive at $4,211 per vehicle. But that was a wafer-thin rise of just $22 from January.

DaimlerChrysler's Chrysler division, which has posted year-over-year U.S. sales gains for the past five months, spent an average of $4,007 per vehicle on incentives in February, meanwhile, up from $3,904 in January.

Ford Motor Co., which has posted lower U.S. sales for five consecutive months, placed a distant third in February incentives spending with an average of $3,443, Autodata said. That was up about 7 percent from January.

Industry pundits have likened spending on interest-free loans, cash rebates and other incentives for new vehicle buyers to drug addiction, since they have a dangerous potential to mushroom out of control and destroy profits. They also prop up the sales volumes that mass market automakers need to keep their plants running at or near full capacity, however.

Nissan Motor Co. Ltd., which posted a huge 46 percent jump in its U.S. sales in February, led U.S. monthly incentives spending by Japanese automakers at an average of $1,688 per vehicle. That was down a notch from an average of $1,704 per vehicle in January.

Spending by Toyota Motor Corp. was essentially unchanged, at an average of $859 per vehicle. But Honda Motor Co. Ltd. ratcheted up its spending by about 33 percent to an average of $864 per vehicle.

Average spending by European brands totaled $1,801 per vehicle in February, a 12 percent increase from January.