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Import Incentives on the Rise

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The Daily Auto Insider

Tuesday, February 7, 2006

February 2006

The average automotive manufacturer incentive in the U.S. was $2,423 per vehicle sold in January 2006, down $109, or four percent, from December 2005, and up $15, or 0.6 percent, from January 2005, according to Edmunds.com, an online resource for automotive information.

The industry's aggregate incentives spending is estimated to have totaled $2.6 billion in January, down from $3.7 billion in December, according to an Edmunds.com news release. Chrysler, Ford and General Motors spent an aggregate of $1.84 billion, or 71 percent of the total; Japanese manufacturers spent $489 million, or 19 percent; European manufacturers spent $186 million, or seven percent; and Korean manufacturers spent $93 million, or four percent.

"While the domestics are still spending far more proportionally, the numbers are not as far off as they had been," remarked Dr. Jane Liu, vice president of data analysis for Edmunds.com. "Our January sales forecast predicted that domestic automakers earned approximately 54 percent market share of new vehicle sales, and that Japanese, European and Korean automakers would earn 35 percent, six percent and five percent, respectively."

According to Edmunds.com, combined incentives spending for domestic manufacturers averaged $3,226 per vehicle sold in January, down from $3,501 in December 2005. Chrysler's incentives spending was up $216 to $4,314 per vehicle sold — a record high for Chrysler; Ford's incentives spending was down $214 to $2,911 per vehicle sold; and General Motors decreased its incentives by $621 to $2,824 per vehicle sold.

From December to January, European automakers increased incentives spending by $543 to an average of $2,466 per vehicle sold; Japanese automakers increased incentives spending by $137 to a record high of $1,287 per vehicle sold; and Korean automakers increased incentives spending by $121 to an average of $1,890 per vehicle sold.

Comparing all brands, in January Scion and Porsche spent the least, $78 and $585 per vehicle sold, respectively. At the other end of the spectrum, Jaguar spent the most, $6,832, followed by Lincoln at $5,241 per vehicle sold. Relative to their vehicle prices, Mercury and Jeep spent the most, 18.9 percent and 15.2 percent of sticker price, respectively, while Scion spent the least, 0.5 percent, followed by Porsche at 0.8 percent of sticker price.

Among vehicle segments, large SUVs continued to have the highest average incentives, $5,998 per vehicle sold, while incentives on large trucks were next highest at $3,632. Sport cars had the lowest average incentives per vehicle, $715, while incentives on compact cars averaged just $970 per vehicle. Analysis of incentives expenditures as a percentage of average sticker price for each segment shows large SUVs averaged the highest, 13.7 percent, and minivans followed at 11.3% of sticker price. Sports cars averaged the lowest, 2.4 percent, while incentives on luxury SUVs averaged just 4.7 percent of sticker price.

Edmunds.com says its monthly True Cost of Incentives report takes into account all manufacturers' various U.S. incentives programs, including subvented interest rates and lease programs, as well as cash rebates to consumers and dealers. To ensure the greatest possible accuracy, Edmunds.com bases its calculations on sales volume, including the mix of vehicle makes and models for each month, as well as on the proportion of vehicles for which each type of incentive was used.

Link: http://www.caranddriver.com/article.asp?se...rticle_id=10644

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