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Auto Incentives Fall for Fifth Straight Month, Says Edmunds.com

Edmunds.com estimated that the average automotive manufacturer incentive in the U.S. was $2,475 per vehicle sold in August 2009, down $231, or 8.5 percent, from July 2009, and down $327, or 11.7 percent, from August 2008.

by Staff
September 2, 2009
3 min to read


SANTA MONICA, Calif. — Edmunds.com estimated that the average automotive manufacturer incentive in the U.S. was $2,475 per vehicle sold in August 2009, down $231, or 8.5 percent, from July 2009, and down $327, or 11.7 percent, from August 2008.

“In March, the industry spent a record $3,165 per car, but since that time incentives have continuously fallen,” stated Jessica Caldwell, director of industry analysis for Edmunds.com. “Supply is low right now since 'Cash for Clunkers' depleted the small inventories generated during shortened production runs earlier this year, but I expect we’ll be telling a very different story in the months to come.”

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According to Edmunds.com, combined incentives spending for domestic manufacturers averaged $3,193 per vehicle sold in August 2009, down from $3,617 in July 2009. From July 2009 to August 2009, European automakers increased incentives spending by $289 to $3,751 per vehicle sold; Japanese automakers decreased incentives spending by $11 to $1,571 per vehicle sold; and Korean automakers decreased incentives spending by $523 to $2,504 per vehicle sold.

True Cost of Incentives for the Top Seven Automakers

Automaker

August 2009

July 2009

August 2008

Chrysler Group

$3,018

$4,218

$4,604

Ford

$3,182

$3,311

$3,437

General Motors

$3,343

$3,647

$4,053

Honda

$947

$1,281

$1,426

Hyundai

$2,504

$3,027

$2,044

Nissan

$2,620

$2,608

$2,512

Toyota

$1,543

$1,310

$1,534

Industry Average

$2,475

$2,706

$2,802

In August 2009, the industry’s aggregate incentive spending is estimated to have totaled approximately $2.9 billion, up 7.6 percent from July 2009. Chrysler, Ford and General Motors spent an aggregate of $1.5 billion, or 53.6 percent of the total; Japanese manufacturers spent $778 million, or 26.8 percent; European manufacturers spent $299 million, or a near-record 10.3 percent; and Korean manufacturers spent $270 million, or 9.3 percent.

“Unlike the rest of the industry, the European automakers boosted incentives in August, but their luxury cars and sports cars still didn’t sell well during the Cash for Clunkers period,” noted Edmunds.com Senior Analyst Michelle Krebs in her report on AutoObserver.com. “Meanwhile, compact cars and trucks sold like crazy, and in retrospect it seems that automakers may have spent more than they needed to when incentivizing them.”

Among vehicle segments, premium luxury cars had the highest average incentives, $5,931 per vehicle sold, followed by premium sport cars at $5,791. Subcompact cars had the lowest average incentives per vehicle sold, $1,314, followed by sport cars at $1,862. Analysis of incentives expenditures as a percentage of average sticker price for each segment shows compact trucks averaged the highest, 11.4 percent, followed by large cars at 11.1 percent of sticker price. Sport cars averaged the lowest with 5.9 percent and premium sport cars followed with 6.1 percent of sticker price.

Comparing all brands, in August Scion spent $235 followed by smart at $422 per vehicle sold. At the other end of the spectrum, Cadillac spent the most, $6,121, followed by BMW at $6,010 per vehicle sold. Relative to their vehicle prices, Pontiac and Volvo spent the most, 17.3 percent and 15.9 percent of sticker price, respectively; while Scion spent the least at 1.4 percent and Smart spent 2.9 percent.

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