Automaker Incentives Hit Lowest Levels Since 2005
Edmunds.com estimated that the average “True Cost of Incentives” from automotive manufacturers in the United States was $2,118 per new car sold in April 2011, down $250, or 10.6 percent, from March 2011, and down $515, or 19.6 percent, from April 2010.
SANTA MONICA, Calif. — Edmunds.com estimated that the average “True Cost of Incentives” from automotive manufacturers in the United States was $2,118 per new car sold in April 2011, down $250, or 10.6 percent, from March 2011, and down $515, or 19.6 percent, from April 2010. The figure stands as the lowest incentive spending by the auto industry since Edmunds.com reported an average spending of $1,962 in October 2005.
"This is the clearest indication yet that automakers are gearing up for inventory shortages," said Jessica Caldwell, director of industry analysis for Edmunds.com. "Demand for new cars has been growing as economic recovery has strengthened, but now the industry may experience a hiccup if consumers decide to wait for the next deal to come around, which may not be until the autumn."
A new commentary by Edmunds.com CEO Jeremy Anwyl reveals that consumer interest already started to fade throughout the month of April. The seasonally adjusted annual rate (SAAR) of car sales was as high as 14.7 million units in the first few days of the month. By the last week of April, the SAAR had fallen to 13 million. More on this can be found at http://www.autoobserver.com/2011/05/april-sales-pace-bucks-tradition.html.
“April sales usually start slow and then jump after April 15, which may have something to do tax-filing day,” said Anwyl. “This year we have seen the opposite pattern.”
According to Edmunds.com, combined incentives spending for domestic manufacturers averaged $2,683 per vehicle sold in April 2011, down from $3,081 in March 2011. From March 2011 to April 2011, European automakers decreased incentives spending $37 to $1,885 per vehicle sold; Japanese automakers decreased incentives spending $236 to $1,696 per vehicle sold; and Korean automakers increased incentives spending $38 to $1,285 per vehicle sold.
True Cost of Incentives for the Top Six Automakers | |||
Automaker | April 2011 | March 2011 | April 2010 |
Chrysler Group | $2,455 | $2,882 | $3,338 |
Ford | $2,421 | $3,012 | $3,232 |
General Motors | $3,016 | $3,259 | $3,301 |
Honda | $1,715 | $1,765 | $1,779 |
Nissan | $1,886 | $2,367 | $2,474 |
Toyota | $1,687 | $1,968 | $2,329 |
Industry Average | $2,118 | $2,368 | $2,633 |
In April 2011, the industry's aggregate incentive spending totaled approximately $2.5 billion, down 15.9 percent from March 2011. Chrysler, Ford and General Motors spent an aggregate of $1.4 billion, or 56.9 percent of the total; Japanese manufacturers spent $751 million, or 30.3 percent; European manufacturers spent $186 million, or 7.5 percent; and Korean manufacturers spent $133 million, or 5.4 percent.
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