Incentives Dip as Automakers Launch 2010 Models
November 03, 2009

Incentives paid by automakers dipped in October from September and a year ago as they launch new 2010 models, which don't need them yet, and wind down 2009 models, Edmunds.com reports.

The average automotive manufacturer incentive in the U.S. was $2,468 per vehicle sold in October 2009, according to Edmunds.com analysis of Total Cost of Incentives (TCI). That's down $329, or 11.8 percent, from September, and down $209, or 7.8 percent, from October 2008.

"Incentives declined 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."

But the mix varies widely from manufacturer to manufacturer. General Motors, for instance, said 60 percent of its sales were 2009 models whereas nearly all of Ford's sales were 2010 models.

Model Year	Percentage of October 2009 Sales	Percentage of September 2009 Sales	True Cost of 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

Source: Edmunds.com

The mix showed in the differences in their incentive spending: Ford spent less than it did in September or the year-ago October; GM was the industry's biggest spender.

True Cost of Incentives for the Top 7 Automakers
Automaker	Oct. 2009	Sept. 2009	Oct. 2008
Chrysler Group (Chrysler, Dodge, Jeep)	$3,219	$4,224	$3,695
Ford (Ford, Lincoln, Mercury, Volvo)	$2,909	$3,087	$3,886
General Motors (Buick, Cadillac, Chevrolet, GMC, Hummer, Pontiac, Saab, Saturn)	$4,277	$4,316	$3,668
Honda (Acura, Honda)	$508	$929	$1,049
Hyundai (Hyundai, Kia)	$1,751	$2,052	$2,528
Nissan (Infiniti, Nissan)	$2,505	$2,982	$1,795
Toyota (Lexus, Scion, Toyota)	$1,338	$1,515	$1,576
Industry Average	$2,468	$2,797	$2,677

Source: Edmunds.com

By Region of Origin

Combined incentives spending for domestic manufacturers averaged $3,655 per vehicle sold in October, down from $3,880 in September.

From September to October, European automakers decreased incentives spending by $635 to $2,686 per vehicle sold; Japanese automakers by $363 to $1,258 per vehicle sold; and Korean automakers decreased by $301 to $1,751 per vehicle sold.

In October, the industry's aggregate incentive spending is estimated to have totaled approximately $2.04 billion, down 1.9 percent from September.

Chrysler, Ford and GM 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. 
 
By Category

Many automakers designated October as "truck month" and to be sure, the large truck segment reached a new incentive peak for the year, climbing to more than $5,000 per truck. 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.

By Brand

By brand, the low spenders were Mini, spending $58 a vehicle, 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.
 
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.

Posted by Michelle Krebs at 7:00 AM under Analysis , Companies , Ford , GM , Toyota | Comments (1) | digg this | Seed Newsvine

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