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Incentives Slip in October as Dealers Clear Out Old Inventory

Edmunds.com estimated that the average car incentive in the United States was $2,498 per vehicle sold in October 2010, down $61, or 2.4 percent, from September 2010, and down $172, or 6.4 percent, from October 2009.

by Staff
November 3, 2010
3 min to read


SANTA MONICA, Calif. — Edmunds.com estimated that the average car incentive in the United States was $2,498 per vehicle sold in October 2010, down $61, or 2.4 percent, from September 2010, and down $172, or 6.4 percent, from October 2009.

"It is typical to have a dip in average incentives this time of year since the older and more heavily discounted models no longer make up the bulk of new cars sold," stated Jessica Caldwell, senior analyst for Edmunds.com. "About 47 percent of the cars sold in October were 2010 model year, compared with 63 percent last month."

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According to Edmunds.com, combined incentives spending for domestic manufacturers averaged $3,200 per vehicle sold in October 2010, up from $3,135 in September 2010. From September 2010 to October 2010, European automakers decreased incentives spending by $59 to $2,374 per vehicle sold; Japanese automakers decreased incentives spending by $244 to $1,860 per vehicle sold; and Korean automakers increased incentives spending by $5 to $1,611 per vehicle sold.

True Cost of Incentives for the Top Seven Automakers

Automaker

October 2010

September 2010

October 2009

Chrysler Group

$2,927

$2,974

$3,780

Ford

$3,099

$3,065

$3,071

General Motors

$3,437

$3,291

$4,382

Honda

$1,433

$1,736

$856

Nissan

$2,321

$2,862

$2,553

Toyota

$2,134

$2,158

$1,475

Industry Average

$2,498

$2,559

$2,670

 

In October 2010, the industry's aggregate incentive spending is estimated to have totaled approximately $2.3 billion, down 6 percent from September 2010. Chrysler, Ford and General Motors spent an aggregate of $1.3 billion, or 57.9 percent of the total; Japanese manufacturers spent $649 million, or 28.3 percent; European manufacturers spent $207 million, or 9.0 percent; and Korean manufacturers spent $112 million, or 4.9 percent.

"Of the Big Six automakers, Chrysler sold the highest percentage of 2010 model year vehicles in October, 71 percent, while GM sold the highest percent of 2011 model year vehicles in October, 70 percent," noted Edmunds.com Senior Analyst Michelle Krebs in her report for AutoObserver.com. "GM's 2010 models are typically discounted by $2,245 more than GM's 2011 models, while Toyota only offers $793 more for a 2010 model year. That probably explains why Toyota is having a harder time clearing out its old inventory. Only 45 percent of new Toyotas sold in October were from the 2011 model year."

Among vehicle segments, premium sport cars had the highest average incentives, $6,068 per vehicle sold, followed by premium luxury cars at $5,580. Subcompact cars had the lowest average incentives per vehicle sold, $1,192, followed by sport cars at $1,319. Analysis of incentives expenditures as a percentage of average sticker price for each segment shows large cars averaged the highest, 12.7 percent, followed by large trucks at 11.1 percent of sticker price. Sport cars averaged the lowest with 3.6 percent and luxury SUVs followed with 4.3 percent of sticker price.

Comparing all brands, in October MINI spent the least, $349 followed by Subaru at $474 per vehicle sold. At the other end of the spectrum, HUMMER spent the most, $5,541, followed by Saab at $5,403 per vehicle sold. Relative to their vehicle prices, Mercury and Saab spent the most, 16.1 percent and 13.7 percent of sticker price, respectively; while MINI spent 1.3 and Subaru spent 1.8 percent.

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