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Average Incentives Rise, Domestics Curb Spending

April 15, 2014

McCLEAN, Va. — Despite incentive spending rising year over year in March for the 14th consecutive month, incentive growth was the lowest since September 2013, the NADA Used Car Guide reported this last week.

According to Autodata, the industry average for incentives rose to $2,725 per unit, up 5.9% from the previous year. And much of that increase was directed at passenger cars, with spending for that segment increasing 18%. On the other end were light trucks, which realized a 4.3% drop in incentive spending, according to the NADA Used Car Guide’s monthly report. The firm also spotted another trend from last month.

“While Asian and European brands’ spending jumped up by 14% and 13% respectively, the Detroit Three collectively spent 0.2% less than last March, but the cutbacks would have appeared more significant had Ford Motor Co. not driven its incentives up by 14%,” the firm’s report stated.

The NADA Used Car Guide also noted that General Motors did not increase incentives in March as expected. “With General Motors struggling to improve its sales results for much of 2014 thus far, speculation grew over whether the automaker would open up its pockets to boost deliveries or not,” read the report. “However, GM exhibited restraint and achieved 4.1% sales growth in spite of cutting incentives on both cars and trucks for an overall 8% decline.”

According to the report, Buick (up 18%) and Cadillac (up 8%) may have spent more year over year, but volume brands Chevrolet and GMC pulled incentives back by a respective 13% and 11%. The increased spending by the Ford (up 12%) and Lincoln (up 19%), however, did not result in a significant sales increase. Accord to the report, the two brands realized a 3.1% sales gain.

Fiat’s Chrysler also reduced incentive spending by 3.5%, although the only brand to exhibit a cutback was Jeep, which spent 11% less than a year ago. However, the brand successfully increased deliveries by 47%.

Toyota realized a only modest 4.9% increase after increasing incentives for both Toyota (up 4.2%) and Lexus (up 34%). Sales for American Motor Co. were actually down 2% despite spending 46% more on its Honda brand. Nissan North America’s incentives were down for both its brands — down 0.3% for Nissan and 13% for Infiniti — yet sales improved by 8.3%.

Additionally, Subaru’s incentives fell to $794 per unit, down 29% from last year, while its sales were up 21%. Mazda also spent 17% less on incentive compared to last year, but the automaker realized a 9% increase in deliveries.

“Meanwhile, Volkswagen’s 2.6% sales decline was worst in the industry even through its spending went up by 24% to reach $2,925 per unit,” the report noted.

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