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Incentives Decline in October, Says Edmunds.com

Edmunds.com estimated today that the average automotive manufacturer incentive in the United States was $2,468 per vehicle sold in October 2009, down $329, or 11.8 percent, from September 2009, and down $209, or 7.8 percent, from October 2008.

by Staff
November 4, 2009
3 min to read


SANTA MONICA, Calif. — Edmunds.com estimated today that the average automotive manufacturer incentive in the United States was $2,468 per vehicle sold in October 2009, down $329, or 11.8 percent, from September 2009, and down $209, or 7.8 percent, from October 2008.

"Incentives declined simply because fewer old model year vehicles were sold in October, and the newer vehicles are not discounted nearly as heavily," explained Jessica Caldwell, director of industry analysis for Edmunds.com. "Over 55 percent of vehicles sold in October were 2010 model year, compared with about 36 percent in September.”

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Model Year






Percentage of October 2009 Sales






Percentage of September 2009 Sales






True Cost of Incentives in October 2009






True Cost of Incentives in September 2009

2008






1.7%






1.9%






$ 3,439






$ 3,704

2009






42.6%






61.5%






$ 3,595






$ 3,388

2010






55.7%






36.7%






$ 1,569






$ 1,651

According to Edmunds.com, combined incentives spending for domestic manufacturers averaged $3,655 per vehicle sold in October 2009, down from $3,880 in September 2009. From September 2009 to October 2009, European automakers decreased incentives spending by $635 to $2,686 per vehicle sold; Japanese automakers decreased incentives spending by $363 to $1,258 per vehicle sold; and Korean automakers decreased incentives spending by $301 to $1,751 per vehicle sold.

True Cost of Incentives for the Top Seven Automakers

Automaker

October
2009

September
2009

October
2008

Chrysler Group

$3,219

$4,224

$3,695

Ford

$2,909

$3,087

$3,886

General Motors

$4,277

$4,316

$3,668

Honda

$508

$929

$1,049

Hyundai

$1,751

$2,052

$2,528

Nissan

$2,505

$2,982

$1,795

Toyota

$1,338

$1,515

$1,576

Industry Average

$2,468

$2,797

$2,677


In October 2009, the industry's aggregate incentive spending is estimated to have totaled approximately $2.04 billion, down 1.9 percent from September 2009. Chrysler, Ford and General Motors spent an aggregate of $1.3 billion, or 64.9 percent of the total; Japanese manufacturers spent $418 million, or 20.3 percent; European manufacturers spent $215 million, or 10.5 percent; and Korean manufacturers spent $87 million, or 4.3 percent.

"Many automakers deemed October ‘truck month’ and sure enough, the large truck segment reached a new incentive peak for the year, climbing to over $5,000 per truck,” Edmunds.com Senior Analyst Michelle Krebs wrote on AutoObserver.com. “Truck month’ provided a good value for buyers who weren’t deterred by rising gas prices.”

Among vehicle segments, premium sport cars had the highest average incentives, $8,826 per vehicle sold, followed by premium luxury cars at $6,395. Subcompact cars had the lowest average incentives per vehicle sold, $928, followed by compact cars at $1,354. Analysis of incentives expenditures as a percentage of average sticker price for each segment shows large trucks averaged the highest, 14.8 percent, followed by large cars at 12.6 percent of sticker price. Sport cars averaged the lowest with 5.3 percent and minivans followed with 5.4 percent of sticker price.

Comparing all brands, in October MINI spent $58 followed by Subaru at $262 per vehicle sold. At the other end of the spectrum, Cadillac spent the most, $7,398, followed by HUMMER at $6,051 per vehicle sold. Relative to their vehicle prices, Pontiac and Cadillac spent the most, 19.2 percent and 15.1 percent of sticker price, respectively; while MINI spent 0.3 and Subaru spent 1.0 percent.

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