Power Information Network Reports: Incentives on New Vehicles Fall in June
New-vehicle incentives decreased in June compared with a year ago, according to actual retail transaction data from the Power Information Network (PIN), LLC, an affiliate of J.D. Power and Associates.
The average new-vehicle incentive amount in June (including all incentive categories) was $2,690 – down almost 6.6 percent versus May and down 7.6 percent compared with June 2003.
While incentive amounts dropped in June, the average new-vehicle retail prices (less rebates) remained flat. The average price consumers paid for a new vehicle in June was $25,206, with new cars selling at an average of $22,537 and new trucks at $27,329.
New vehicles sold in June sat on the dealer's lot an average of 68 days, 4.6-percent longer than in May and nearly 8 percent longer than vehicles sold in June 2003.
"Incentives dropped in June and the result was that sales also slipped nearly 2 percent year-over-year," said Tom Libby, director of industry analysis at PIN. "Consumers have certain expectations when it comes to incentives. When incentives drop, consumers have shown that they're willing to wait until automakers sweeten the deal. We're already seeing automakers increase incentive amounts in July in order to boost sales."
Used-vehicle prices in June increased slightly when compared with a year ago. The average price of a used vehicle in June was $15,568 – up 3.2 percent compared to June 2003. Used cars sold for an average price of $13,973 – up 2.6 percent from a year ago – and used trucks sold for an average of $17,454 – up 4.2 percent.
The percentage of consumers who traded in a vehicle in June and owed more than their trade-in was worth was considerably higher than it was a year ago. More than 35 percent of consumers who traded in a vehicle had a higher payoff than the cash value of the vehicle – up 18.8 percent from June 2003.
"The percentage of upside-down consumers remains quite high," Libby said. "The good news is the percentage in June is down from May, and May was down from April, so it appears to be trending in the right direction."