Incentives for new SUV buyers soaring with fuel prices

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By: Wise Marketer Staff |

Posted on June 19, 2004

Incentives for new SUV buyers soaring with fuel prices

As the price of fuel rises steadily, large SUVs have some of the highest vehicle buyer incentives in the USA, according to automotive information firm

The average manufacturer incentive per vehicle sold in the United States was US$2,507 in May 2004, down US$25 (1.0%) from May 2003, and up US$140 (5.9%) from April 2004. But large SUVs averaged US$4,350 per vehicle in May 2004.'s monthly True Cost of Incentives (TCI) report takes into account all of the manufacturers' various USA incentives programmes, including subvented interest rates and lease programmes, as well as cash rebates to consumers and dealers.

Market share changes Overall, combined incentives spending for domestic Chrysler, Ford and General Motors nameplates went up US$213 to US$3,461 from April. Chrysler increased incentives spending in May by US$304 to US$3,248 per vehicle and gained 0.1% market share. GM increased incentives spending by US$303 to US$3,923 per vehicle but lost 0.7% market share. Ford increased incentives spending by US$13 to US$2,927 per vehicle and lost 0.5% market share.

In May 2004, the Korean automakers decreased incentives spending by an average of US$69 to US$1,813 per vehicle and only lost 0.1% market share. However, European manufacturers increased incentives spending by US$293 to US$2,042 per vehicle - the highest since August 2002 - and still lost 0.7% market share. Japanese makers increased incentives spending by US$106 to US$899 per vehicle and gained 1.8% in market share.

Extremes Of all brands, Mini spent the least on incentives (only US$58 per vehicle), while Scion spent only US$79 per vehicle and Lexus spent only US$230. At the other end of the spectrum, Cadillac spent the most incentives dollars per vehicle for the third consecutive month (at US$5,738), followed by Lincoln at US$5,102 and Oldsmobile at US$5,039.

Among all vehicle segments, large SUVs continued to offer the highest average incentives in May 2004. Other segments with high incentives were large cars at US$3,664 and mid-size SUVs at US$2,973. Compact cars had the lowest average incentives at US$1,696 per vehicle, followed by luxury SUVs at US$1,925 and sports cars at US$1,942.

SUVs and fuel prices "While the luxury SUV segment has the industry's second lowest incentives, in May the makers saw fit to direct the biggest increase in incentives to that segment, raising it a substantial US$727 per vehicle, or nearly 50% more than April's average," explained Dr Jane Liu, vice president of data analysis for "Overall, May SUV incentives averaged US$297 per vehicle higher than a year ago, while the average incentive was US$25 lower."

Since May 2003 compact cars have gained the most market share, up from 14.8% to 15.7%, while mid-size SUVs have lost the most market share, decreasing from 13.2% to 12.1% of the US new vehicle market.

"Clearly, rising fuel prices are in the minds of the vehicle manufacturers as they set up new incentives programmes, and in the minds of buyers who are shifting market share to more fuel efficient vehicles," concluded Dr Liu.

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