Average Manufacturer Incentive Per Vehicle Down 11.3% in January

Edmunds.com reported that the average manufacturer incentive per vehicle sold in the United States was $1,939 in January 2003, down 11.3 percent from $2,185 in December 2002.

This data takes into account all manufacturers' various incentives programs, including subvented interest rates and lease programs as well as cash rebates to consumers and dealers. To assure the greatest possible accuracy, Edmunds.com says it 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.

In January 2003, the average incentives for the domestic nameplates offered by DaimlerChrysler, Ford and General Motors were $2,749, as compared to $1,829 in January 2002, an increase of over 50 percent. However, these manufacturers' average incentives for January decreased 6.6 percent from the $2,945 average reported for December 2002.

Overall, the large sport-utility vehicle (SUV) segment experienced the greatest reduction in incentives during January, dropping 27.6 percent to $2,408, as compared to December when large SUVs, with an average of $3,325 per vehicle, had the highest incentives of any vehicle segment. As a result, the large car segment moved into that unfortunate position, with total January incentives of $3,280 per unit, according Edmunds.com.

The compact car segment experienced the largest increase from December 2002 to January 2003, with average incentives rising 13.2 percent from $1,185 to $1,342.

"Correlating sales volumes and incentives data, we see that the market share for compact and midsize cars increased when the incentives were high, while the market share for compact SUVs and compact pickups increased even though the incentives being offered decreased," said Dr. Jane Liu, executive director of data analysis for Edmunds.com. "This indicates that incentives, while costing the automakers a sizable amount, only drive sales to a limited degree, as people strongly consider other factors when making automotive purchases."