Edmunds.com Reports True Cost of Incentives for October; Auto Industry Spent $2.3 Billion to Stimulate Sales
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SANTA MONICA, Calif. November 3, 2008: Edmunds.com, the premier online resource for automotive information, estimated today that the average automotive manufacturer incentive in the U.S. was $2,648 per vehicle sold in October 2008, down $253, or 8.7 percent, from September 2008, and up $471, or 21.6 percent, from October 2007.
"Automakers have to do what they can to stimulate sales while still being fiscally responsible during these shaky economic times," stated Jesse Toprak, Executive Director of Industry Analysis for Edmunds.com. “The industry is still far below the record average incentive of $3,146, which was reached in September 2004."
According to Edmunds.com, combined incentives spending for domestic manufacturers averaged $3,718 per vehicle sold in October 2008, down from $4,041 in September 2008. From September 2008 to October 2008, European automakers increased incentives spending by $93 to $2,866 per vehicle sold; Japanese automakers increased incentives spending by $107 to $1,495 per vehicle sold; and Korean automakers increased incentives spending by $101 to $2,417 per vehicle sold.
| True Cost of Incentives for the "Big Six" Automakers | ||||||
| Automaker | October 2008 | September 2008 | October 2007 | |||
| Chrysler Group | $3,598 | $4,679 | $3,105 | |||
| Ford |
$3,758 |
$3,639 | $3,205 | |||
| General Motors | $3,716 | $3,957 | $3,058 | |||
| Honda | $1,082 | $1,054 | $639 | |||
| Nissan | $2,016 | $2,104 | $2,117 | |||
| Toyota | $1,632 | $1,374 | $706 | |||
In October 2008, the industry's aggregate incentive spending is estimated to have totaled approximately $2.3 billion, down 17.4 percent from September 2008. Chrysler, Ford and General Motors spent an aggregate of $1.46 billion, or 63.0 percent of the total; Japanese manufacturers spent $542 million, or 23.5 percent; European manufacturers spent $210 million, or 9.1 percent; and Korean manufacturers spent $104 million, or 4.5 percent.
"Toyota is on track to achieve record market share with record incentive levels, and Honda isn’t far behind," commented Edmunds' AutoObserver.com Senior Editor Michelle Krebs. "Their incentives programs are getting more aggressive and are catching consumers’ eye because they are unusually good deals for those brands. The automakers that tend to offer repetitive incentives will need to do something creative to have their message be heard."
Among vehicle segments, premium luxury cars had the highest average incentives, $8,344 per vehicle sold, followed by large trucks at $5,764. Subcompact cars had the lowest average incentives per vehicle sold, $393, followed by compact cars at $879. Analysis of incentives expenditures as a percentage of average sticker price for each segment shows large trucks averaged the highest, 17.6 percent, followed by large SUVs at 12.0 percent of sticker price. Subcompact cars averaged the lowest with 2.5 percent and compact cars followed with 4.6 percent of sticker price.
Comparing all brands, in October MINI spent the least at $36 followed by Scion at $155 per vehicle sold. At the other end of the spectrum, HUMMER spent the most, $5,587, followed by GMC at $4,889 per vehicle sold. Relative to their vehicle prices, Mercury and HUMMER spent the most, 16.5 percent and 14.6 percent of sticker price, respectively; while MINI spent just 0.2 and Scion spent 0.9 percent.
Edmunds.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.
About Edmunds Inc. (http://www.edmunds.com/help/about/)
Edmunds Inc. publishes four Web sites that empower, engage and educate automotive consumers, enthusiasts and insiders. Edmunds.com, the premier online resource for automotive consumer information, launched in 1995 as the first automotive information Web site. Its most popular feature, the Edmunds.com True Market Value®, is relied upon by millions of people seeking current transaction prices for new and used vehicles. 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 StudySM, was ranked first in the Survey of Car-Shopping Web Sites by The Wall Street Journal and was rated "#1" in Keynote's study of third-party automotive Web sites. Inside Line launched in 2005 and is the most-read automotive enthusiast Web site. CarSpace launched in 2006 and is an automotive social networking Web site. AutoObserver.com launched in 2007 and provides insightful automotive industry commentary and analysis. Edmunds Inc. is headquartered in Santa Monica, California, and maintains a satellite office in suburban Detroit.