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Edmunds.com Reports May Incentives Rise Five Percent From 2007

June 4, 2008

SANTA MONICA, Calif. — Edmunds.com estimated the average automotive manufacturer incentive in the U.S. was $2,483 per vehicle sold in May 2008, up $132 or 5.6 percent, from April 2008, and up $117 or 5.0 percent, from May 2007.

"Manufacturers are trying to avoid increasing incentives," said Jesse Toprak, executive director of industry analysis for Edmunds.com. "But we predict that incentives will continue to rise throughout the summer months to help boost vehicle sales."

Combined incentives spending for domestic manufacturers averaged $3,489 per vehicle sold in May 2008, up from $3,263 in April 2008. From April 2008 to May 2008, European automakers increased incentives spending by $241 to $2,935 per vehicle sold; Japanese automakers increased incentives spending by $94 to $1,324 per vehicle sold; and Korean automakers decreased incentives spending by $224 to $1,932 per vehicle sold.

In May 2008, the industry's aggregate incentive spending is estimated to have totaled approximately $3.56 billion, up 5.6 percent from April 2008. Chrysler, Ford and General Motors spent an aggregate of $2.35 billion, or 65.8 percent of the total; Japanese manufacturers spent $767 million, or 21.4 percent; European manufacturers spent $313 million, or 8.8 percent; and Korean manufacturers spent $144 million, or 4.0 percent.

"Domestic manufacturers are expected to spend the most amount of money on incentives this summer," commented Edmunds' AutoObserver.com senior editor Michelle Krebs. "The Japanese manufacturers are not expected to increase their spending on incentives because of the public’s perception that they have more fuel-efficient vehicles."

Among vehicle segments, large trucks had the highest average incentives at $4,667 per vehicle sold, followed by large SUVs at $4,603. Sport cars had the lowest average incentives per vehicle sold, $1,198, followed by compact cars at $1,219.

Analysis of incentives expenditures as a percentage of average sticker price for each segment shows large trucks averaged the highest, 14.4 percent, followed by large cars at 13.5 percent of sticker price. Sport cars averaged the lowest, 4.1 percent, followed by luxury sport cars at 5.4 percent of sticker price.

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.

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