Incentives Edge Higher in November, Edmunds.com Estimates
December 01, 2009

Higher Incentives on 2010 models, luxury cars, Hondas, Toyotas and General Motors' orphan brands along with an increase in leasing and lease deals pushed the average automaker incentive in November beyond that of October and that of November a year ago.

Edmunds.com estimates the average incentive at $2,713 per vehicle sold in November, up $52, or 1.9 percent, from October , and up $32, or 1.9 percent, from November 2008.

"With inventories of 2009s being cleared away and 2010 models hitting dealership lots in greater -- more normal -- numbers for this time of year, incentives on those new models are increasing," stated Jessica Caldwell, Director of Industry Analysis for Edmunds.com.

Some manufacturers, notably GM, Chrysler and Hyundai, have been slower to ramp up 2010 models and have focused on selling off 2009s. The carryover clean-up has stretched later into season than is typical due to GM and Chrysler scaling back production during their bankruptcy proceedings and inventories being depleted during the summer's Cash for Clunkers program. That has led to an imbalance of incentive spending on 2010 versus 2009 due to inventory imbalances among manufacturers.

But in November, inventories of 2010 models built and incentives on them climbed by 21 percent from October.

Toyota, Honda Beef Up Incentives 

Surprisingly Japanese automakers, led by Toyota and Honda, showed the largest increase in incentives. Both had double-digit increases from October.

Honda had one of the largest percentage increases among all automakers - 40 percent - from October. Honda broke the $1,000 per vehicle mark for the first time since July. Toyota's incentives rose 16 percent from October.

"Tremendous leasing incentives accounted for significant boosts in Edmunds' Total Cost of Incentives (TCI) boosts for Honda and Toyota last month," explained Caldwell.

GM Spends to Rid Orphan Brands

Not surprisingly,  GM, boosted by hefty incentives on its orphan brands, had the highest incentives. Four GM brands -- all cast-off brands -- had the highest incentive-to-sticker-price ratio. Pontiac and Saturn, brands GM is winding down, had the highest TCI-to-price ratio. Hummer, supposedly sold, and future-unknown Saab followed.

Highest Incentive-to-Sticker Price Ratio

Rank	Make	Incentives	MSRP	Ratio
1	Pontiac	$4,640	$24,201	19.17
2	Saturn	$4,865	$29,030	16.76
3	Hummer	$5,975	$40,614	14.71
4	Saab	$5,597	$39,729	14.09

Source: Edmunds.com

GM has a deal to sell Hummer to China's Sichuan Tengzhong Heavy Industrial Machinery. But GM's track record at finalizing the sale of cast-offs has been dismal of late. Attempts to sell Saturn and Saab failed at the 11th hour.

In fact, Saab's future remains uncertain, though it could become clearer after Tuesday's GM board of directors where Saab tops the agenda. GM had a deal with Sweden's Koenigsegg to sell the Swedish marque but that deal fell through last week. The automaker's board of directors meets Tuesday to figure out what's next for Saab.

Luxury Deals

Luxury automakers as a group continued to offer generous incentives to clear old inventory as the new year approaches, though it varied by brand.

Struggling  Porsche doubled its incentive spend from October - spending $5,652 per vehicle.

BMW and Mercedes Benz, on the other hand, spent slightly less than last month signifying their 2009 model year sell down must be going well.

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. -- Michelle Krebs, Senior Analyst and Editor at Large

 

 

Posted by Michelle Krebs at 4:52 AM under Featured , GM , Toyota | Comments (1) | digg this | Seed Newsvine

Technorati Tags: bmw, cashforclunkers, generalmotors, honda, hummer, hyundai, incentives, koeniggsegg, mercedesbenz, nissan, pontiac, porsche, saab, saturn, tengzhongheavyindustrialmachinery, totalcostofincentives, toyota