Edmunds.com Reports True Cost of Incentives: Auto Industry Spent Record $5.3 Billion in July

SANTA MONICA, Calif., Aug. 4, 2005 -- Edmunds.com, the premier online resource for automotive information, reported today that the average manufacturer automotive incentive in the United States was $2,981 per vehicle sold in July 2005, up $96, or 3.3%, from July 2004, and up $136 or 4.8% from June 2005.

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.

The industry's aggregate incentives spending totaled a record $5.3 billion in July. Domestic manufacturers spent $4.33 billion or 81% of the total cost, Japanese manufacturers spent $653 million or 12%, European manufacturers spent $245 million or 5%, and Korean manufacturers spent $137 million or 3%.

"Some automakers are now implementing a 'value pricing' strategy to help to reduce this excessive cost," remarked Dr. Jane Liu, Vice President of Data Analysis for Edmunds.com. "However, it may not work as well as they'd like, since many consumers are programmed to expect incentives and may not even notice that sticker prices have been lowered. Automakers in that situation may be forced to offer incentives that drop prices even further."

Overall, combined incentives spending for domestic Chrysler, Ford and General Motors nameplates averaged $3,942 per vehicle sold in July, up $113 from June 2005. Chrysler decreased incentives spending $73 to $3,623 per vehicle sold in July. In the same period, Chrysler's market share increased 0.2% to 13.3%. Ford increased incentives spending by $688 to $3,876 per vehicle sold in July while its market share increased 3% to 18.9%. General Motors decreased incentives spending by $56 to $4,135 per vehicle sold in July while its market share decreased 3.4% to 28.7%. The combined market share of the Big Three was 61.0% in July, down 0.2% from June.

From June to July, European automakers increased incentives spending by $447 to an average of $2,382 per vehicle sold; their market share slid 0.1% to 5.8%. Japanese automakers increased incentives spending by $189 to a record high average of $1,236 per vehicle sold; their market increased 1% to 29.3%. Korean automakers increased incentives spending by $99 to an average of $1,945 per vehicle sold; their market share decreased 0.3% to 3.9%.

Comparing all brands in July, Mini spent only $28 while Scion spent $102 and Porsche spent $157 per vehicle sold. At the other end of the spectrum, Cadillac spent the most, $6,442, followed by Saab at $5523 and Jaguar at $5,097 per vehicle sold. Looking at incentives expenditures as a percentage of MSRP for each brand, Saab and Pontiac spent the most, 17.8% and 15.0%, respectively, while Mini and Porsche spent the least, 0.1% and 0.2%, respectively.

Among vehicle segments, large SUVs continued to offer the highest average incentives, $5,164 per vehicle sold, while sports cars had the lowest average incentives per vehicle at $995. Looking at incentives expenditures as a percentage of MSRP for each segment, large trucks were the highest, 12.5%, while sports cars were the lowest, 3.4%.

Midsize cars have lost the most market share since July 2004, decreasing from 15.2% to 12.4%, while large trucks have gained the most market share during that period, up from 14.9% to 18.6% of the new vehicle market.

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.

About Edmunds.com, Inc.

Edmunds.com is the premier online resource for automotive information. Its comprehensive set of data, tools and services, including Edmunds.com True Market Value(R) pricing, is generated by Edmunds.com Information Solutions and is licensed to third parties. For example, the company supplies content for the auto sections of NYTimes.com, AOL, About.com and IGN.com, provides weekly data to Automotive News and delivers monthly data reports to Wall Street analysts. Edmunds.com also publishes a high-speed, on-screen car magazine called Inside Line available free at www.insideline.com. Edmunds.com was named "best car research" site by Forbes ASAP, has been selected by consumers as the "most useful Web site" according to every J.D. Power and Associates New Autoshopper.com Study(SM) and was ranked first in the Survey of Car-Shopping Web Sites as reported by The Wall Street Journal. The company is headquartered in Santa Monica, Calif. and maintains a satellite office outside Detroit.