GM, Toyota Boost Incentives; Toyota Sets Record
July 01, 2008
SANTA MONICA, Calif. - Locked in a battle for No. 1 sales in America in June, General Motors and Toyota were the only automakers to hike incentives in June this year compared with last year, according to estimates by Edmunds.com.
"Toyota incentives reached a record high," said Jesse Toprak, executive director of Industry Analysis for Edmunds.com, parent of AutoObserver. "General Motors' last minute 72-hour sales campaign , which is giving buyers no-interest financing for 72 months on most models, helped increase its incentive spending for the month, and Toyota needed some additional dollars to move its large SUVs and trucks from dealer lots."
In total, the average automotive manufacturer incentive in the U.S. was $2,356 per vehicle sold in June, down $22, or 0.9 percent, from June 2007, but up $32, or 1.4 percent, from May.
Still incentives unlikely had little impact as the auto industry is expected to post its worst sales since the 1990s when reports come in on Tuesday. Edmunds.com forecasts a double-digit decline in industry sales. Some analysts predict Toyota may outsell GM for the first time in history when June sales are tallied.
Edmunds.com's forecast calls for June sales to be off 16.7 percent from a year ago and 13.3 percent from dismal May. Sales will be off 6.3 percent from a year ago when adjusted for the three fewer selling days this June than last.
Incentive Tallies
In June, the industry's aggregate incentive spending is estimated to have totaled approximately $2.84 billion, down 12.3 percent from May. Chrysler, Ford and General Motors spent an aggregate of $1.7 billion, or 60.3 percent of the total; Japanese manufacturers spent $712 million, or 25.0 percent; European manufacturers spent $278 million, or 9.8 percent; and Korean manufacturers spent $140 million, or 4.9 percent.
Combined incentives spending for domestic manufacturers averaged $3,213 per vehicle sold in June, down from $3,349 in May. European automakers increased incentives spending by $299 to $3,048 per vehicle sold in June from May; Japanese automakers increased incentives spending by $135 to $1,404 per vehicle sold; and Korean automakers decreased incentives spending by $22 to $1,951 per vehicle sold.
More of the Same for Incentives
June showed more of the same as previous months for incentives, with domestics spending the most, even though European and Japanese automakers increased their spending. Continuing the trend of many months, the biggest incentives are going to large SUVs and trucks. Incentives for SUVs and trucks are likely to increase further as Chrysler and Ford become more aggressive in order to draw down their inventories of the current Dodge Ram and Ford F-150 to make way for redesigned models this fall.
Large SUVs had the highest average incentives, $5,097 per vehicle sold, followed by large trucks at $4,329. Sport cars had the lowest average incentives per vehicle sold, $1,128, followed by compact cars at $1,168.
Analysis of incentives expenditures as a percentage of average sticker price for each segment shows large SUVs averaged the highest, 13.5 percent, followed by large trucks at 13.3 percent of sticker price. Sport cars averaged the lowest, 3.9 percent, followed by luxury sport cars at 4.9 percent of sticker price.
Comparing all brands,Mini spent the least in June at $125 followed by Scion at $223 per vehicle sold. At the other end of the spectrum, Saab spent the most, $7,215, followed by Cadillac at $6,612 per vehicle sold. Relative to their vehicle prices, Saab and Hummer spent the most, 20.6 percent and 15.2 percent of sticker price, respectively; while MINI spent 0.6 percent and Scion spent just 1.3 percent.
|
True Cost of Incentives for the "Big Six" Automakers | |||
|
Automaker |
June 2008 |
May 2008 |
June 2007 |
|
Chrysler Group |
$3,427 |
$3,630 |
$3,822 |
|
Ford |
$2,745 |
$3,190 |
$3,131 |
|
General Motors |
$3,454 |
$3,309 |
$2,891 |
|
Honda |
$1,367 |
$1,145 |
$1,412 |
|
Nissan |
$1,974 |
$1,989 |
$2,137 |
|
Toyota |
$1,186 |
$1,034 |
$988 |
Source: Edmunds.com
About the Numbers
Edmunds.com's monthly True Cost of Incentives (TCI) report takes into account all automakers' 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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