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Edmunds.com Reports True Cost of Incentives for August

September 4, 2007

SANTA MONICA, Calif. — Edmunds.com estimated that the average automotive manufacturer incentive in the U.S. was $2,362 per vehicle sold in August 2007, down $159, or 6.3 percent, from July 2007, and up $51, or 2.2 percent, from August 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 $3,293 per vehicle sold in August 2007, down from $3,393 in July 2007. From July to August, European automakers decreased incentives spending by $307 to $2,976 per vehicle sold; Japanese automakers decreased incentives spending by $239 to $1,196 per vehicle sold; and Korean automakers increased incentives spending by $153 to $1,910 per vehicle sold.

In August, the industry's aggregate incentive spending is estimated to have totaled approximately $3.34 billion, essentially unchanged from July. Chrysler, Ford and General Motors spent an aggregate of $2.25 billion, or 67.2 percent of the total; Japanese manufacturers spent $668 million, or 19.9 percent; European manufacturers spent $291 million, or 8.7 percent; and Korean manufacturers spent $139 million, or 4.2 percent.

Among vehicle segments, large trucks had the highest average incentives, $4,349 per vehicle sold, followed by large SUVs at $3,947. Compact cars had the lowest average incentives per vehicle sold, $873, followed by sport cars at $1,037. Analysis of incentives expenditures as a percentage of average sticker price for each segment shows large trucks averaged the highest, 13.7 percent, followed by large cars at 11.9 percent of sticker price. Luxury sports cars averaged the lowest, 3.4 percent, followed by sports cars at 3.6 percent of sticker price.

Comparing all brands, in August Mini spent the least — virtually nothing, followed by Scion at $86 per vehicle sold. At the other end of the spectrum, Saab spent the most, $6,732, followed by Cadillac at $6,177 per vehicle sold. Relative to their vehicle prices, Saab and Jeep spent the most, 20.1 percent and 14.6 percent of sticker price, respectively, while Mini spent virtually nothing and Scion spent just 0.5 percent.

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