Edmunds.com (www.edmunds.com), the online resource for automotive information, has found that manufacturer-to-consumer incentives and rebates spur higher spending by new car buyers, while prices for cars in general continues to fall.

"Incentives and rebates, excessive inventories and the competitive market environment have pushed down the values of vehicles, but our research shows many consumers apply these savings to their purchases by buying more optional equipment and more luxurious vehicles than they otherwise would," said Dr. Jane Liu, executive director of data analysis for Edmunds.com. "However, our price index shows that, apples-to-apples, light vehicle prices fell 0.3 percent between April and May."

According to Edmunds.com, not including rebates and incentives, the average transaction price for new vehicles has increased from $25,152 in May 2002 to $26,442 in May 2003. By country of origin, the Korean manufacturers had the highest increase in their average transaction prices, up 9.8 percent from $16,315 in May 2002 to $17,919 in May 2003. Of all manufacturers, Kia enjoyed the highest average transaction price increase, up 14.5 percent from $16,062 in May 2002 to $18,390 in May 2003. Land Rover, Nissan and Hyundai closely followed. With respect to specific models, the GMC Sierra 2500 had the highest average transaction price increase, up 14.5 percent from $22,972 in May 2002 to $26,304 in May 2003. Other significant transaction price increases occurred for the Lincoln Navigator, Toyota Sienna, Dodge Ram 3500 and Saturn L-Series.

The company says studying a fixed basket of new vehicles with fixed options over time presents a different picture. In May 2003, the Edmunds Price Index for new vehicles (EPI-N) was down to 97.1 from its base reference point of 100 in January 2002, reflecting a 0.3 percent decrease from April 2003. Most vehicle categories reflect a steady decline since January 2002. Compact SUVs and compact cars have each dropped more than 5 percent in this period, to 94.6 and 94.9, respectively.

This data was released June 26 with the Edmunds Price Index for new vehicles (EPI-N), which reflects price shifts for the industry as a whole. Similar to the Consumer Price Index, the EPI-N measures the average changes in retail prices for a fixed basket of new vehicles with fixed options over time for the purpose of trend analysis. Edmunds.com's data reflects transaction prices as well as manufacturer-to-consumer rebates, including low APR and special lease programs.

"By using a price index based on the most accurate transaction and incentives data in the marketplace, automakers, financial institutions and other interested parties have a more precise tool for analyzing price trends and the industry overall," said Jeremy Anwyl, president of Edmunds.com.

About Edmunds.com, Inc.

Edmunds.com is an online resource for automotive information. Its comprehensive set of data, tools and services, including Edmunds.com True Market Value® pricing, is generated by Edmunds Data Services and is licensed to third parties. For example, the company supplies over 800,000 pages of content for NYTimes.com's auto section, provides weekly data to Automotive News and delivers monthly data reports to Morgan Stanley. The company is headquartered in Santa Monica, California and maintains a satellite office in Troy, Michigan.