The Industry's Leading Source For F&I, Sales And Technology

Top News

High Incentives Spending in April Shows Mixed Results

May 4, 2009

SANTA MONICA, Calif. — Edmunds.com estimated that the average automotive manufacturer incentive in the U.S. was $3,031 per vehicle sold in April 2009, down $134, or 4.2 percent, from March 2009, and up $680, or 28.9 percent, from April 2008.

"This month’s sales reports may prove that there is a point of diminishing returns for incentives spending," stated Jesse Toprak, executive director of industry analysis for Edmunds.com. “For some automakers, this month’s high incentives diluted brand image and hurt residual values while delivering only a negligible lift in sales.”

True Cost of Incentives for the Top Seven Automakers

Automaker               April 2009      March 2009     April 2008

Chrysler                       $4,288             $4,889         $3,795

Ford                            $3,636             $3,673         $2,989

General Motors             $4,063             $4,772*       $3,132

Honda                         $1,439*            $1,334        $1,405

Hyundai                       $3,591*            $3,504        $2,156

Nissan                         $2,779*            $2,234        $1,796

Toyota                         $1,648             $1,565           $840

Industry Average          $3,031             $3,165*       $2,351

According to Edmunds.com, combined incentives spending for domestic manufacturers averaged $3,959 per vehicle sold in April 2009, down from $4,465 in March 2009. From March 2009 to April 2009, European automakers increased incentives spending by $26 to $3,410 per vehicle sold; Japanese automakers increased incentives spending by $132 to $1,740 per vehicle sold; and Korean automakers increased incentives spending by $87 to $3,591 per vehicle sold.

In April 2009, the industry's aggregate incentive spending is estimated to have totaled approximately $2.6 billion, down 3.8 percent from March 2009. Chrysler, Ford and General Motors spent an aggregate of $1.5 billion, or 59.5 percent of the total; Japanese manufacturers spent $575 million, or 22.1 percent; European manufacturers spent $257 million, or 9.9 percent; and Korean manufacturers spent $221 million, or 8.5 percent.

"Despite earning little return in the way of higher sales on their incentive investments, automakers seem to be playing a game of chicken – all are waiting for the other guy to drop back first,” commented Edmunds' AutoObserver.com senior editor Michelle Krebs. "Automakers appear to fear the bottom falling out completely if they back down on incentives.”

Among vehicle segments, premium sport cars had the highest average incentives, $6,540 per vehicle sold, followed by large SUVs at $4,797. Subcompact cars had the lowest average incentives per vehicle sold, $1060, followed by compact cars at $1,893. Analysis of incentives expenditures as a percentage of average sticker price for each segment shows large car averaged the highest, 14.0 percent, followed by large trucks at 13.0 percent of sticker price. Premium luxury cars averaged the lowest with 4.5 percent and subcompact cars followed with 6.7 percent of sticker price.

Comparing all brands, in April Scion spent the least, $160 per vehicle sold, followed by Subaru at $884. At the other end of the spectrum, Cadillac spent the most, $5,675 per vehicle sold, followed by Infiniti at $5,504. Relative to their vehicle prices, Kia and Mercury spent the most, 20.9 percent and 16.2 percent of sticker price, respectively; while Scion spent 0.9 and Lexus spent 3.3 percent.

Your Comment

Please note that comments may be moderated. 
Leave this field empty:
Your Name:  
Your Email:  

CLOSE [X]

READ NEXT

APCO/EasyCare Named as One of Georgia’s Top Privately Held Businesses

Automobile Protection Corporation (APCO), a provider of EasyCare vehicle service contracts and other F&I products, was chosen by DiversityBusiness.com as one of the top privately held businesses in Georgia.