Despite Year-End Blitz, Incentives Costs Dip, Edmunds.com Reports
By Michelle Krebs January 5, 2010Despite the year-end incentives blitz and holiday marketing campaigns, automakers actually spent less on incentives in December than they did a year ago or even in November.
Edmunds.com estimates the average automotive manufacturer incentive was $2,542 per vehicle sold in December, down $167, or 6.2 percent, from November, and down $320, or 11.2 percent, from December 2008.
"In December, only about a quarter of new cars sold were leftover 2009 models. That sent the average incentive expenditure lower compared to November and last December when the old model-year vehicles made up closer to half of the new car sales," said Jessica Caldwell, Edmunds.com's director of Industry Analysis.
Yet it was the hefty deals on the 2009s that grabbed headlines. And they were hefty.
"If we only look at 2009 model-year vehicles, where the real deals were, automakers spent an average of $4,317 per vehicle sold in December," said Caldwell.
In particular, close-out deals for General Motors soon-to-be-orphaned Saturn and Pontiac brands, which resulted in as much as $6,500 off every vehicle, and the hype surrounding those deals sent consumers to the Internet and dealerships in droves.
A Wall Street Journal story on GM offering $7,000 per vehicle dealer incentives on leftover Saturns and Pontiacs generated loads of media hype. Dealerships were flooded with bargain-hunting buyers, GM reports. "Saturn" and "Pontiac" were near the top of the Google charts in most searched words. Edmunds.com saw activity for the two brands soar by about 10 times the average.
In reality, the sale on Pontiacs and Saturns was totally overhyped, in part because there weren't that many to sell,. However, the urgency of the closeout sale motivated people to storm the dealerships -- a pure psychological reaction to a shortage.
Edmunds.com estimates less than 5,000 are in inventory; GM likely will report Tuesday that its supply of those vehicles is far less than that is nearly sold-out.
By Region
In December, the industry's aggregate incentives spending is estimated to have totaled approximately $2.57 billion, up 26.9 percent from November.
- U.S. automakers Chrysler, Ford and GM spent an aggregate of $1.6 billion, or 60.5 percent of the total;
- Japanese manufacturers spent $621 million, or 24.1 percent of the total;
- European manufacturers spent $279 million, or 10.8 percent; and Korean manufacturers spent $118 million, or 4.6 percent.
Combined incentives spending for domestic manufacturers averaged $3,425 per vehicle sold in December 2009, down from $3,684 in November 2009.
From November to December:
- European automakers decreased incentives spending by $136 to $3,063 per vehicle sold;
- Japanese automakers decreased incentives spending by $80 to $1,564 per vehicle sold;
- Korean automakers decreased incentives spending by $147 to $1,866 per vehicle sold.
By Segment, Highs and Lows
Among vehicle segments, premium luxury cars had the highest average incentives, $4,838 per vehicle sold, followed by large SUV at $4,831.
Subcompact cars had the lowest average incentives per vehicle sold, $1,047, followed by compact cars at $1,491.
As % of Sticker
Analysis of incentives expenditures as a percentage of average sticker price for each segment shows large trucks averaged the highest at 12.4 percent, followed by large SUVs at 11.9 percent of sticker price. Sport cars averaged the lowest with 4.7 percent and premium sport cars followed with 4.8 percent of sticker price.
By Brand
Comparing all brands, Scion spent the least, $361 followed by Smart at $413 per vehicle sold.
At the other end of the spectrum, Saturn spent the most, $5,925, followed by Pontiac at $5,882 per vehicle sold. Relative to their vehicle prices, Pontiac and Saturn spent the most, 24.2 percent and 21.6 percent of sticker price, respectively.
In contrast, Porsche spent only 1.5 of sticker price; Subaru spent 2.0 percent.
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True Cost of Incentives for the Top Seven Automakers |
|||
|
Automaker |
December 2009 |
November 2009 |
December 2008 |
|
Chrysler Group (Chrysler, Dodge, Jeep) |
$2,552 |
$3,146 |
$3,681 |
|
Ford (Ford, Lincoln, Mercury, Volvo) |
$2,994 |
$3,070 |
$3,985 |
|
General Motors (Buick, Cadillac, Chevrolet, |
$4,077 |
$4,343 |
$3,554 |
|
Honda (Acura, Honda) |
$1,282 |
$1,290 |
$1,209 |
|
Hyundai (Hyundai, Kia) |
$1,866 |
$2,013 |
$2,766 |
|
Nissan (Infiniti, Nissan) |
$2,073 |
$2,147 |
$2,167 |
|
Toyota (Lexus, Scion, Toyota) |
$1,676 |
$1,775 |
$2,071* |
|
Industry Average |
$2,542 |
$2,709 |
$2,862 |
* Denotes a record
Source: Edmunds.com
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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