The average manufacturer incentive per vehicle sold in the United States was $US2,655 per vehicle sold in October 2004, up $134, or 5.3%, from October 2003, and down $491, or 15.6%, from September 2004, according to online information provider Edmunds.com.
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Edmunds’ monthly True Cost of Incentives (TCISM) report takes into account all of the manufacturers’ various United States incentives programmes, including subvented interest rates and lease programmes as well as cash rebates to consumers and dealers.
Overall, combined incentives spending for domestic Chrysler, Ford and General Motors brands was $3,663 per unit in October, down $616 from September 2004. Chrysler lowered incentives spending in October by $133 to $3,644 per vehicle and gained 1.0% market share, achieving 12.8% in total. Ford decreased incentives spending by $637 to $3,410 per vehicle, and gained 0.3% market share, achieving 18.4%. GM had the most dramatic drop in incentives spending in October, down by $735 to $3,858 per vehicle. GM experienced a steep 6.0% decrease of its US market share, falling to 25.3%, which is its lowest point since September 2002.
As a result of GM’s decrease, total US market share for domestic brands fell to 56.5%, the lowest in recorded history.
In October 2004, Korean automakers reduced incentives spending by $22 to average $2,185 per vehicle while European automakers reduced incentives spending by $167 to average $2,330 per vehicle sold. Japanese automakers spent $929 per vehicle sold in August, up slightly from $911 the previous month.
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By GlobalData“Most manufacturers did not have to rely on incentives as heavily this month since they were selling more 2005 model year vehicles,” said Edmunds.com data analysis head Jane Liu. “Also, consumers realise that 2005 models will hold their value longer than their 2004 counterparts, and are willing to pay more for them.”
Of all brands, BMW’s Mini spent the least on incentives, $12 per vehicle sold, while Toyota’s new entry level brand Scion spent only $73 and luxury car unit Lexus spent just $167. At the other end of the spectrum, Ford’s Lincoln was the biggest spender in October at $4,823 per vehicle sold, followed by GM’s Saab at $4,566 and Ford’s Jaguar at $4,345.
Among vehicle segments, large SUVs continued to offer the highest average incentives, $4,680 per vehicle sold. Other segments with high incentives were large trucks at $3,373 and large cars at $3,258. Compact cars had the lowest average incentives at $1,449 per vehicle sold, followed by luxury sports cars at $1,880 and luxury SUVs at $1,933.
“In most cases, vehicles with high [suggested retail] prices tend to have correspondingly high incentives, but the luxury sports car and luxury SUV segments are selling without much [discount],” said Liu. “Products in those segments are very desirable right now, even as fuel prices fluctuate.”
Midsize cars have lost the most market share since October 2003, decreasing from 16.6% to 15.6%, while large cars have gained the most market share during that period, up from 4.2% to 5.8% of the US new vehicle market.
