Car makers boost incentives to end the year well

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By: Wise Marketer Staff |

Posted on January 9, 2008

Car makers boost incentives to end the year well

The online automotive market analyst,, estimates that the average automotive manufacturer incentive in the US was US$2,472 per vehicle sold in December 2007, up US$197 (8.7%) from November 2007, and up US$157 (6.8%) from December 2006.

The company's monthly 'True Cost of Incentives' report takes into account automakers' US incentives programmes, including subvented interest rates and lease programmes, as well as cash rebates to consumers and dealers.

Year-end incentives boosted Perhaps in an effort to finish the year on a high note, combined incentives spending for US manufacturers averaged US$3,332 per vehicle in December 2007, up from US$3,140 in November 2007.

From November to December, European automakers also increased incentives spending (up by US$218 to US$2,630 per vehicle sold), while Japanese makers increased their incentives spending by US$148 (to US$1,266 per vehicle sold). Korean makers increased incentives spending by only US$46 (to US$2,195 per vehicle sold).

Aggregate incentive spend In December 2007, the industry's aggregate incentive spending was estimated to have totalled some US$3.38 billion, up 26.7% from November 2007.

Chrysler, Ford and General Motors spent an aggregate of US$2.33 billion (68.9% of the total), while Japanese manufacturers spent US$629 million (18.6%), European manufacturers spent US$286 million (8.4%), and Korean manufacturers spent only US$139 million (4.1%).

The big six "In October and November sales were painfully slow, so in December some automakers took more dramatic steps to attract shoppers and sell off inventory," explained Jesse Toprak, executive director of industry analysis for "We anticipate that in 2008 automakers will have to continue their generosity, especially in segments that are particularly competitive or especially slow-moving."

Among vehicle segments, large trucks had the highest average incentives (US$3,870 per vehicle sold), followed by large cars at US$3,731. Compact cars had the lowest average incentives per vehicle sold (US$1,005), followed by sports cars at US$1,550.

Analysis of incentives spending as a percentage of average sticker price for each segment showed that large cars averaged the highest (13.6% of sticker price), followed by large trucks (12.1%). Luxury sports cars averaged the lowest (3.3%), followed by sports cars (4.8%).

"Automakers are targeting their incentives very carefully these days," added Edmunds' senior editor, Michelle Krebs. "They realise that there is no reason to throw money at those flocking to the fuel-saving compacts and crowd-pleasing sports cars."

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