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Edmunds.com Reports True Cost of Incentives for June

July 3, 2007

Santa Monica, Calif. — Edmunds.com estimated that the average automotive manufacturer incentive in the U.S. was $2,483 per vehicle sold in June 2007, up $92, or 3.85 percent, from May 2007, and down $132, or 5.05 percent, from June 2006.

Edmunds.com's monthly True Cost of Incentives (TCI) 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.

According to Edmunds.com, combined incentives spending for domestic manufacturers averaged $3,200 per vehicle sold in June 2007, up from $3,139 in May 2007. From May to June, European automakers decreased incentives spending by $230 to $3,108 per vehicle sold; Japanese automakers increased incentives spending by $163 to $1,484 per vehicle sold; and Korean automakers increased incentives spending by $39 to $1,554 per vehicle sold.

In June, the industry's aggregate incentive spending is estimated to have totaled approximately $3.8 billion, up from $3.7 billion in May. Chrysler, Ford and General Motors spent an aggregate of $2.6 billion, or 67.2 percent of the total; Japanese manufacturers spent $823 million, or 21.4 percent; European manufacturers spent $322 million, or 8.34 percent; and Korean manufacturers spent $119 million, or 3.1 percent.

"Of the ‘Big Six’ automakers, only Honda and Toyota have higher incentives than they did this time last year," stated Jesse Toprak, executive director of industry analysis for Edmunds.com. "The competitiveness of the marketplace seems to be catching up with the Japanese heavyweights.”

Among vehicle segments, minivans had the highest average incentives, $3,900 per vehicle sold, followed by large trucks at $3,864. Sport cars had the lowest average incentives per vehicle sold, $1,038, followed by compact cars at $1,047. Analysis of incentives expenditures as a percentage of average sticker price for each segment shows minivans averaged the highest, 13.8 percent, followed by large cars at 13.2 percent of sticker price. Sport cars averaged the lowest, 3.6 percent, followed by luxury sports cars at 3.8 percent of sticker price.

Comparing all brands, in June Mini spent the least, virtually nothing, followed by Scion at $68 per vehicle sold. At the other end of the spectrum, Cadillac spent the most, $7,682, followed by Lincoln at $5,430 per vehicle sold. Relative to their vehicle prices, Cadillac and Saab spent the most, 16.7 percent and 16.1 percent of sticker price, respectively, while Mini spent essentially nothing and Scion spent just 0.4 percent.

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