Edmunds.com Estimates August Incentives Scarcely Down From 2008 High Point
September 02, 2008

By Bill Visnic

The U.S. automotive market has yet to reverse 2008's serious downward lurch, and automakers continue to pile on incentives to induce customers to purchase a new vehicle. Edmunds.com estimates August incentives were down a scant $3 from the 2008 high point set in July - and increased substantially when compared to the same period last year.

Edmunds.com estimates the average automotive manufacturer incentive in the U.S. was $2,642 per vehicle sold in August 2008, down $3, or 0.1 percent, from July, but up $173, or 7 percent, from August 2007.

Once again, domestic automakers shelled out the most. Combined incentives spending for domestic manufacturers averaged $3,832 per vehicle sold in August 2008, up from $3,762 in July 2008. In aggregate, the domestics spent $387 more per vehicle in August compared with July, which had set the year's record.

Domestics Hike, But GM Bucks the Trend

But despite it's heavily promoted employee-price-for-all incentive that began in August, General Motors Corp. was alone among the domestic automakers to actually reduce incentive spending compared with July. GM's incentive per vehicle was reduced by $198 in August.

"Contrary to what you would expect, General Motors' Employee Discount for Everyone program did not inflate GM's incentive spending for the month of August," said Jesse Toprak, Executive Director of Industry Analysis for Edmunds.com.

"In fact, because the program required dealers to participate and subsidize part of the offer, the result was a net decrease in GM's overall incentive costs."

Chrysler LLC, Ford Motor Co. and GM nonetheless combined for a disproportionate 64.4 percent of the total industry incentive spending of $3.32 billion - a total that increased some 10.7 percent versus July.

True Cost of Incentives for the "Big Six" Automakers
Automaker	August 2008	July 2008	August 2007
Chrysler Group	$4,366	$4,022	$3,769
Ford	$3,443	$3,202	$3,139
General Motors	$3,865	$4,063	$3,329
Honda	$1,205	$1,279	$1,102
Nissan	$2,312	$2,445	$2,304
Toyota	$1,398	$1,243	$887

Europe, Asia Manage Incentive Cuts

Most automakers managed to slightly chop their reliance on incentives in August, Edmunds.com estimates.

From July 2008 to August 2008, European automakers decreased incentives spending by $811 to $2,578 per vehicle sold; Japanese makers decreased incentives spending by $9 to $1,492 per vehicle sold; and Korean automakers decreased incentives spending by $53 to $2,079 per vehicle sold.

In August, Japanese manufacturers spent an aggregate $792 million, or 23.7 percent of the total industry incentive spending; European manufacturers spent $250 million, or 7.5 percent of the total and Korean manufacturers spent $146 million, or 4.4 percent of the total.

Luxury Spends Big, Mini Spends Small

Among vehicle segments, premium luxury cars had the highest average incentives, $7,198 per vehicle sold, followed by large SUVs at $6,211. Subcompact cars had the lowest average incentives per vehicle sold, $531, followed by compact cars at $961.

Analysis of incentives expenditures as a percentage of average sticker price for each segment shows large trucks averaged the highest, 17.2 percent, followed by large SUVs at 16.2 percent of sticker price. Subcompact cars averaged the lowest, 3.4 percent, followed by premium sport cars at 4.8 percent of sticker price.

Comparing all brands, in August MINI spent $80, followed by Scion at $131 per vehicle sold. At the other end of the spectrum, HUMMER spent the most, $8,861, followed by Cadillac at $7,006 per vehicle sold.

Although Edmunds.com predicts incentive spending will shrink as the industry ushers in new 2009 models, the trend could hardly be considered to have begun in August, considering the overall average incentive was reduced by a negligible $3 per vehicle sold.

Edmunds.com's monthly True Cost of IncentivesSM (TCISM) 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.

Posted by Bill Visnic at 9:26 PM under Analysis , Business , Chrysler , Companies , Ford , GM , Toyota | Comments (1) | digg this | Seed Newsvine

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