The Car and Truck Fleet and Leasing Management Magazine Reports Automakers’ True Cost of Incentives: Large SUVs are the Most Subsidized Vehicles in the Industry

August 4, 2003 ( ), an online resource for automotive information, reported on July 29th that the average manufacturer incentive per vehicle sold in the United States was $2,624 in June 2003, up $654 or 33.2% from June 2002 and up 3.6% or $92 from May 2003. Industry average “days-to-turn,” which measures how many days on average it takes to sell a vehicle after it hits the dealer's lot, remained constant from last month at 69 days, but was up from last June’s 55’s monthly True Cost of Incentives(SM) (TCI(SM)) report takes into account all of the manufacturers’ various U.S. incentives programs, including subvented interest rates and lease programs as well as cash rebates to consumers and dealers. To assure the greatest possible accuracy, 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.Incentives spending for domestic Chrysler, Ford and General Motors nameplates averaged a record high $3,516 per unit in incentives in June, compared to $1,898 for European automakers, $1,369 for Korean automakers, and $1,030 for Japanese automakers.Chrysler had the biggest increase in incentives spending in June, up 14.2% to $3,494. Despite this jump in incentives, the U.S. market share for Chrysler fell 0.3% to 13.5% in June. Ford increased incentives spending by 1% for the month, to $3,252 per unit, and saw its market share inch up 0.2% to 19.4%. General Motors' increased its incentives spending 0.9% for the month, to $3,708 per unit, while its market share increased 1.6% to 28.5% in June, its highest level since December 2002.By vehicle segment, large SUVs had the highest average incentives this month at $3,829, followed by large cars at $3,478 and large trucks at $3,299. Luxury SUVs had the lowest average incentives at $1,270, with sports cars at $1,645 and compact SUVs at $1,716. Compact cars gained the most market share, up 0.7% to 15.5%, while midsize SUVs lost the most market share, down 0.5% to 12.7%.“Because consumers are becoming less responsive to traditional incentives, many manufacturers are trying to break new ground by offering matching down payments, longer terms for low APR programs, subsidized leases, 24-hour test drives and higher rebate amounts,” said Dr. Jane Liu, Executive Director of Data Analysis for “However, there are certainly some exceptions where manufacturers with strong brands have produced highly desired vehicles; the new Toyota Sienna, Volkswagen Touareg and Lexus RX 330 are all having great sales success with virtually no incentives.”
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