US car buyers' incentives drop more than 5%

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By: Wise Marketer Staff |

Posted on December 31, 2003

The average US automotive manufacturer's consumer-level 'buying incentive' dropped by 5% from October to November 2003, now standing at US$2,386 per vehicle sold, according to the online automotive information source,

Edmunds' monthly True Cost of Incentives (TCI) report takes into account all of the manufacturers' incentives programmes effective in the USA, including subvented interest rates, lease programmes, as well as cash rebates to consumers and dealers. The report's calculations are based not only on sales volume (for a mix of vehicle makes and models) but also on the proportion of vehicles for which each type of incentive was used.

Changes by manufacturer
Incentives spending for domestic Chrysler, Ford and General Motors vehicles fell by 2.6% from US$3,445 in October to US$3,355 in November 2003. Chrysler reduced incentives by 6.0% overall to US$3,365 per vehicle, and experienced a market share decrease of 0.3% during that time. General Motors, however, reduced its incentives by 0.9% to US$3,611 per vehicle while gaining almost 1% of market share.

Ford reduced incentives by 4.0% to US$2,964 per vehicle (its lowest level for seven months) and saw its market share decrease by 6.9%, now accounting for 18.6% of the total US market (compared to 19.9% in October). By contrast, Mini and Scion had little or no incentive on offer in November, while Lexus spent only US$153 per vehicle. Land Rover spent US$321 and Acura spent US$330 per vehicle.

Foreign markets
In comparison, European vehicle manufacturers spent US$1,608 per vehicle, while Korean manufacturers spent US$1,440 and Japanese manufacturers spent only US$749 per vehicle sold.

"Scion is new to the marketplace, while Mini closely manages supply in relationship to demand," commented explained Dr Jane Liu, executive director of data analysis for "The three other manufacturers with low incentives costs each introduced a major redesign of a vehicle that comprises more than a third of its total sales volume, and priced it at a level the market is willing to accept, capturing new car buyers without the need for incentives."

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