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September Incentives Up From a Year Ago, Edmunds.com Reports

October 1, 2008

SANTA MONICA, Calif. -- The average automotive manufacturer incentive in the U.S. was $2,801 per vehicle sold in September 2008, down $1, or 0.04 percent, from August 2008, and up $444, or 18.8 percent, from September 2007, Edmunds.com estimates.

"Although up overall from last year, incentive levels remained flat from August to September despite worsening economic conditions and weak auto sales," said Jesse Toprak, Edmunds' executive director of industry analysis. "The high incentive costs of heavily discounted 2008 models are being offset by the low incentive costs of the 2009 models entering the marketplace."

Combined incentives spending for domestic manufacturers averaged $4,049 per vehicle sold in September 2008, up from $4,000 in August 2008. From August 2008 to September 2008, European automakers increased incentives spending by $344 to $2,910 per vehicle sold; Japanese automakers decreased incentives spending by $180 to $1,494 per vehicle sold; and Korean automakers increased incentives spending by $18 to $2,062 per vehicle sold.

In September 2008, the industry's aggregate incentive spending is estimated to have totaled approximately $2.94 billion, down 15.8 percent from August 2008. Chrysler, Ford and General Motors spent an aggregate of $1.98 billion, or 66.7 percent of the total; Japanese manufacturers spent $639 million, or 21.6 percent; European manufacturers spent $238 million, or 8.0 percent; and Korean manufacturers spent $108 million, or 3.7 percent.

"Chrysler's decision to exit leasing is not saving the automaker money in the short term, said Edmunds' AutoObserver.com senior editor Michelle Kreb. "Instead of leasing, Chrysler is offering record levels of cash and finance incentives to attract buyers, including former lease customers, but consumers are not responding."

Among vehicle segments, premium luxury cars had the highest average incentives, $9,298 per vehicle sold, followed by large trucks at $5,820. Subcompact cars had the lowest average incentives per vehicle sold, $484, followed by compact cars at $770. Analysis of incentives expenditures as a percentage of average sticker price for each segment shows large trucks averaged the highest, 17.9 percent, followed by large SUVs at 14.0 percent of sticker price. Subcompact cars and premium sport cars tied for the lowest at 3.1 percent of sticker price.

Comparing all brands, in September Mini spent $39 followed by Scion at $171 per vehicle sold. At the other end of the spectrum, Hummer spent the most, $9,251, followed by SAAB at $5,797 per vehicle sold. Relative to their vehicle prices, Hummer and Chrysler spent the most, 23.7 percent and 19.3 percent of sticker price, respectively; while Mini spent just 0.2 and Scion spent 1.0 percent.

Edmunds.com's monthly True Cost of Incentives 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.

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