Automakers Maintain Discipline in Inventories and Incentives, Edmunds.com Data Shows
By Michelle Krebs July 1, 2010Despite expected weak sales in June and signs of a slowing economic recovery, automakers are remaining vigilant in keeping inventories low so they don't require expensive incentives to move the metal.
Edmunds.com data shows another dip in incentive spending in June. The average incentive was $2,661 per vehicle sold in June 2010, Edmunds.com estimates. That's down $36, or 1.3 percent, from May and down $196, or 6.9 percent, from June 2009.
Automakers report sales Wednesday, which are expected to by up from the dismal levels of last June but down from weak May of this year. A year ago, incentives were high because inventories were high and sales were particularly depressed as consumers awaited details of the governments Cash for Clunkers program.
A year ago, inventories were bloated compared with this year. For the first six months of 2009, the industry's days-to-turn -- the number of days between a vehicle delivered to a dealership and purchased by a customer -- was over 90 days for every month. For the first six months of 2010 -- and even in the late months of 2009, the industry's days to turn has not exceeded 55 days.
By Region
The industry's total incentive spending is estimated to have totaled approximately $2.64 billion, down 11.1 percent from May.
Edmunds.com estimates show automakers from all regions of origin decreased spending from a year ago and all but U.S. automakers reduced spending from May to June.
By region of origin:
- domestic manufacturers increased incentive spending $11 per vehicle to $3,471 per vehicle sold in June, from May;
- European manufacturers spent $19 less in June at $2,334 per vehicle;
- Japanese automakers spent $97 less in June at $1895;
- Korean automakers spent $6 per vehicle less at $1775.
Chrysler, Ford and General Motors spent a combined $1.6 billion, or 61.3 percent of the total. Japanese manufacturers spent $704 million, or 26.7 percent of the total. European makers spent $182 million, or 6.9 percent. Korean manufacturers spent $137 million, or 5.2 percent of the total.
By Segment
Among vehicle segments, large trucks had the highest average incentives, $4,631 per vehicle sold, followed by premium sport car at $3,883.
In contrast, sports cars had the lowest average incentives per vehicle sold, $1,371, followed by subcompact cars at $1,393.
Analysis of incentives expenditures as a percentage of average sticker price for each segment shows large trucks averaged the highest at 12.6 percent, followed by compact cars at 11.7 percent of sticker price.
Premium luxury cars averaged the lowest at 2.2 percent, and premium sport cars followed with 3.7 percent of sticker price.
By Brand
Subaru spent the least at an estimated $533 per vehicle, followed by Toyota's Scion at $565 per vehicle sold.
At the other end of the spectrum, Saab spent the most at $5,843 per vehicle, followed by Cadillac at $5,505 per vehicle sold.
Relative to their vehicle prices, Mercury -- a brand Ford recently announed would disappear by year-end -- and Saab spent the most - 15.5 percent and 14.5 percent of sticker price, respectively. Subaru and Porsche spent the smallest based at 2.1 percent o sticker.
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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