The average automotive manufacturer incentive in the US was US$2,066 per vehicle sold in October 2005, down $589, or 22% from October 2004, and down $278, or 12%, from September 2005.

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Independent industry analyst Edmunds.com said that based on preliminary data,  incentives in October were the lowest since January 2003, when average incentives were $2,022 per vehicle.


“Manufacturers are finally beginning to see returns on their efforts to lower incentives,” said Edmunds.com data analysis chief Jane Liu. “There will be some sales sacrificed in the short run, but this trend is good for the entire industry in the long term.”


The industry’s aggregate incentives spending is estimated at $2.5bn in October, down from $3.0bn in September.  Domestic Chrysler, Ford and General Motors nameplates spent $1.9bn, or 75% of the total; Japanese manufacturers spent $373m, or 15%; European manufacturers spent $168m, or 7%; and Korean manufacturers spent $91m, or 4%.


Based on preliminary data, combined incentives spending for domestic manufacturers averaged $2,909 per vehicle sold in October – the lowest since February 2003 – down $178 from September 2005.

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All domestic car makers decreased incentives spending in October: Chrysler’s incentives spending was down $172 to $3,206 per vehicle sold; Ford’s incentives spending was down by $275 to $2,751 in October and General Motors’ decreased its incentives in October by $129 to $2,844.


From September to October of this year: European car makers decreased incentives spending by $587 to an average of $1,936 per vehicle sold; Japanese car makers decreased incentives spending by $226 to $966; and Korean car makers decreased incentives spending by $130 to an average of $1,562 per vehicle sold.


Comparing all brands in October, Mini spent only $18 while Scion spent $125 and Porsche spent $470 per vehicle sold. At the other end of the spectrum, Jaguar spent the most, $7,225, followed by Lincoln at $5,825 and Buick at $4,233 per vehicle sold. Mercury and Buick spent the most as a%age of MSRP for their brands, 14.7% and 14%, respectively, while Mini and Porsche spent the least, 0.1% and 0.6%, respectively.


Among vehicle segments, large SUVs continued to offer the highest average incentives, $4,905 per vehicle sold, while sports cars had the lowest average incentives per vehicle at $744 and compact cars followed closely at $793 per vehicle. Analysis of incentives expenditures as a percentage of MSRP for each segment shows large SUVs were the highest, 11.4%, while sports cars and luxury sports cars were the lowest at 2.6%.


“Employee pricing was effective in clearing inventory that typically would have carried high incentives later in the year,” Liu added. “By pulling sales into the summer – earlier than is typical – employee pricing promotions also pulled the higher level of incentives forward, as well.”