Over the summer, automakers tightened up their incentive purses used to drive consumers to their showrooms to make vehicle purchases.
Santa Monica, CA-based Edmunds.com, an online resource for automotive information, estimated that the average automotive manufacturer incentive in the U.S. was $2,390 per vehicle sold in August, down $420 or 15% from July, and down $221 or nearly 9% from August 2005.
“This is a significant drop, but it is not unusual for incentive spending to decline in August,” said Dr. Jane Liu, VP-data analysis for Edmunds.com in a statement. “By late summer, new model year vehicles take up a greater proportion of sales, and they typically require significantly lower incentives than the older models.”
The automotive industry offered consumers a total of $3.6 billion in incentives in August, down 14.2% from $4.2 billion in July. DaimlerChrysler, Ford and General Motors spent a total of $2.4 billion, or 68% of the total; Japanese manufacturers spent $713 million, or 20%; European manufacturers spent $307 million, or 9% and Korean manufacturers spent $127 million, or 3%.
According to Edmunds.com, combined incentive spending for domestic manufacturers averaged $3,135 per vehicle sold in August, down from $3,959 in July. Of the Big Three domestic automakers DaimlerChrysler’s incentives spending was up $245 to $2,868 per vehicle sold compared to Ford’s incentives spending which was down $534 to $3,330 per vehicle sold; and General Motors, which declined by $1,364 to $3,133 per vehicle sold.
DaimlerChrysler’s increase in incentive spending is most likely attributable to its Ask Dr. Z marketing campaign launched in July and which touts employee discounts for consumers (PROMO Xtra July 5, 2006).
Meanwhile, from July to August, European automakers decreased incentives spending by $32 to $3,001 per vehicle sold; Japanese automakers increased incentives spending by $15 to $1,311 per vehicle sold; and Korean automakers increased incentives spending by $26 to $1,723 per vehicle sold.
Comparing all brands, in August Scion spent the least, $74, followed by Porsche at $538 per vehicle sold. At the other end of the spectrum, Jaguar spent the most, $8,447, followed by Cadillac at $5,551 per vehicle sold. Relative to their vehicle prices, Jaguar and Mercury spent the most, 15.4% and 14.9% of sticker price, respectively, while Scion and Porsche spent the least at 0.5% and 0.8%, respectively.
Among vehicle segments, large SUVs had the highest average incentives, $4,760 per vehicle sold, followed by large trucks at $4,132. Compact cars had the lowest average incentives per vehicle sold, $720, followed by sports cars at $891. Analysis of incentives expenditures as a percentage of average sticker price for each segment shows large trucks averaged the highest, 13.5%, followed by large SUVs at 12.5% of sticker price. Luxury sport cars averaged the lowest, 3%, followed by sports cars at 3.3% of sticker price.
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