Edmunds.com Reports True Cost of Incentives: Summer Programs Kick Spending up a Notch

SANTA MONICA, Calif.--July 3, 2006--Edmunds.com, the premier online resource for automotive information, estimated today that the average automotive manufacturer incentive in the U.S. was $2,580 per vehicle sold in June 2006, up $206, or nearly nine percent, from May 2006, but down $265, or nine percent, from June 2005.

Edmunds.com's monthly True Cost of Incentives(SM)(TCI(SM)) 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.

The industry's aggregate incentives spending is estimated to have totaled approximately $4.0 billion in June, up from $3.5 billion in May. Chrysler, Ford and General Motors spent an aggregate of $2.9 billion, or 73 percent of the total; Japanese manufacturers spent $684 million, or 17 percent; European manufacturers spent $287 million, or seven percent; and Korean manufacturers spent $136 million, or three percent.

"Last year at this time, the domestics were responsible for 83 percent of the total incentive spending, and their market share was about ten points higher too," remarked Dr. Jane Liu, Vice President of Data Analysis for Edmunds.com. "This reflects a 12 percent decrease in incentives spending and a 16 percent decrease in market share year over year."

According to Edmunds.com, combined incentives spending for domestic manufacturers averaged $3,465 per vehicle sold in June, up from $3,122 in May 2006. Compared with last month, Chrysler's incentives spending was up $100 to $3,768 per vehicle sold; Ford's incentives spending was up $438 to $3,647 per vehicle sold; and General Motors increased its incentives by $424 to $3,185 per vehicle sold.

From May to June, European automakers decreased incentives spending by $186 to $2,813 per vehicle sold; Japanese automakers increased incentives spending by $42 to $1,290 per vehicle sold; and Korean automakers increased incentives spending by $17 to $1,822 per vehicle sold.

Comparing all brands, in June Scion spent the least, $73, followed by Porsche at $478 per vehicle sold. At the other end of the spectrum, Jaguar spent the most, $6,762, followed by Cadillac at $6,055 per vehicle sold. Relative to their vehicle prices, Jeep and Saab spent the most, 17.2 percent and 16.8 percent of sticker price, respectively, while Scion and Porsche spent the least at 0.5 percent and 0.7 percent, respectively.

Among vehicle segments, large SUVs continued to have the highest average incentives, $4,605 per vehicle sold, followed by large trucks at $4,183. Sport cars had the lowest average incentives per vehicle sold, $743, followed by compact cars at $876. Analysis of incentives expenditures as a percentage of average sticker price for each segment shows large trucks averaged the highest, 13.6 percent, followed by large SUVs at 12.2 percent of sticker price. Sports cars averaged the lowest, 2.7 percent, followed by compact cars at 5.2 percent of sticker price.

"Fuel economy continues to play a major role in vehicle purchase choices," remarked Dr. Jane Liu, Vice President of Data Analysis for Edmunds.com. "The gas guzzlers need a lot of help moving off dealership lots."

About Edmunds.com True Cost of Incentives(SM)(TCI(SM))

Edmunds.com's TCI(SM) is a comprehensive monthly report that measures automobile manufacturers' cost of incentives on vehicles sold in the United States. These costs are reported on a per vehicle basis for the industry as a whole, for each manufacturer, for each make sold by each manufacturer and for each model of each make. TCI covers all aspects of manufacturers' various incentives programs (except volume and similar bonus programs), including dealer cash, manufacturer rebates and consumer savings from subvented APR and lease programs (including subvented lease residual values used in manufacturer leasing programs). Data for the industry, the manufacturers and the makes are derived using weighted averages and are based on actual monthly sales and financing activity.