Edmunds: Incentives Dip Slightly in February
March 01, 2007

Edmunds.com estimates show the average automotive manufacturer incentive in the U.S. was $2,253 per vehicle sold in February 2007, down $33, or 1 percent, from January 2007, and down $95, or 4 percent, from February 2006.

"The industry’s incentives spend is relatively flat this month," stated Jesse Toprak, executive director of industry analysis for Edmunds.com. “Most automakers are following a strategy of steadily decreasing their overall incentives spending, but others are increasing their offers to get the competitive edge at the point of sale."

In February, the industry's aggregate incentive spending is estimated to have totaled approximately $2.7 billion, up from $2.5 billion in January. Chrysler, Ford and General Motors spent an aggregate of $1.9 billion, or 70 percent of the total; Japanese manufacturers spent $530 million, or 19 percent; European manufacturers spent $193 million, or 7 percent; and Korean manufacturers spent $107 million, or 4 percent.

According to Edmunds.com, combined incentives spending for domestic manufacturers averaged $3,035 per vehicle sold in February, down from $3,113 in January 2007. From January to February, European automakers decreased incentives spending by $154 to $2,373 per vehicle sold; Japanese automakers decreased incentives spending by $10 to $1,187 per vehicle sold; and Korean automakers increased incentives spending by $146 to $1,956 per vehicle sold.

Among vehicle segments, large SUVs had the highest average incentives, $3,477 per vehicle sold, followed by large trucks at $3,377. Compact cars had the lowest average incentives per vehicle sold, $942, followed by sports cars at $1,026. Analysis of incentives expenditures as a percentage of average sticker price for each segment shows large cars averaged the highest, 11.9 percent, followed by compact SUVs at 11.4 percent of sticker price. Luxury sport cars averaged the lowest, 2.1 percent, followed by sports cars at 3.6 percent of sticker price.

The newer crossovers seem to be overshadowing the compact SUVs that might otherwise appeal to today’s fuel-economy-conscious consumers. Most of the compact SUV nameplates have been around for quite awhile and there hasn’t been much buzz about them other than their new incentive programs.

Comparing all brands, in February Scion spent the least, $78, followed by Lexus at $613 per vehicle sold. At the other end of the spectrum, Cadillac spent the most, $6,064, followed by Mercury at $4,863 per vehicle sold. Relative to their vehicle prices, Mercury and Jeep spent the most, 18.0 percent and 15.2 percent of sticker price, respectively, while Scion and Lexus spent the least at 0.5 percent and 1.4 percent, respectively.

Edmunds.com's monthly True Cost of IncentivesSM report takes into account all manufacturers' various U.S. incentives programs, including subvented interest rates and lease programs, as well as cash rebates to consumers and dealers. To ensure the greatest possible accuracy, Edmunds.com bases its calculations on sales volume, including the mix of vehicle makes and models for each month, as well as on the proportion of vehicles for which each type of incentive was used.

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