Edmunds.com: OEMs Reduced October Incentives

Edmunds.com computed the average incentive handed out by automakers to move units in October was down against both the previous month and the year-ago period.

Site analysts estimated Wednesday that the average incentive in the U.S. was $2,498 per vehicle sold in October. They indicated that amount was $61, or 2.4 percent, lower than September and $172, or 6.4 percent, below what OEMs utilized in October 2009.

“It is typical to have a dip in average incentives this time of year since the older and more heavily discounted models no longer make up the bulk of new cars sold,” explained Jessica Caldwell, senior analyst for Edmunds.com.

“About 47 percent of the cars sold in October were 2010 model year, compared with 63 percent last month,” Caldwell added.

The site also discovered the combined incentive spending for domestic manufacturers averaged $3,200 per vehicle sold in October. The figure marked a slight uptick from the previous month when these companies averaged $3,135.

Looking at month-over-month changes for other companies, Edmunds.com said:

—European automakers decreased incentives spending by $59 to $2,374 per vehicle sold.

—Japanese automakers decreased incentives spending by $244 to $1,860 per vehicle sold.

—Korean automakers increased incentives spending by $5 to $1,611 per vehicle sold.

All told in October, the site calculated the industry spent approximately $2.3 billion on incentives, 6 percent lower than in September.

Analysts believe Chrysler, Ford and General Motors spent $1.3 billion or 57.9 percent of the total. They also noted a breakdown of other OEMs:

—Japanese manufacturers: $649 million, or 28.3 percent.

—European manufacturers: $207 million, or 9.0 percent.

—Korean manufacturers $112 million, or 4.9 percent.

Among vehicle segments, Edmunds.com found premium sport cars had the highest average incentives at $6,068 per vehicle sold. That segment was followed by premium luxury cars at $5,580.

On the other side of the spectrum, the site pointed out subcompact cars had the lowest average incentives at $1,192, followed by sport cars at $1,319.

The site’s analysis of incentives expenditures as a percentage of average sticker price for each segment showed large cars averaged the highest at 12.7 percent. Large trucks came right behind at 11.1 percent of sticker price. Analysts mentioned sport cars averaged the lowest with 3.6 percent, and they said luxury SUVs followed with 4.3 percent of sticker price.

Comparing all brands in October, Edmunds.com believes Mini spent the least, an average of $349 per unit sold. Subaru came next at $474 per vehicle sold. Meanwhile, the site found Hummer spent the most at $5,541 with Saab right behind at $5,403.

Relative to their vehicle prices, analysts contend Mercury and Saab spent the most, 16.1 percent and 13.7 percent of sticker price, respectively. They also figured Mini spent just 1.3 percent and Subaru spent only 1.8 percent.

“Of the Big Six automakers, Chrysler sold the highest percentage of 2010 model year vehicles in October, 71 percent, while GM sold the highest percent of 2011 model year vehicles in October, 70 percent,” Edmunds.com senior analyst Michelle Krebs determined for her report at AutoObserver.com.

“GM’s 2010 models are typically discounted by $2,245 more than GM’s 2011 models, while Toyota only offers $793 more for a 2010 model year,” she went on to highlight. “That probably explains why Toyota is having a harder time clearing out its old inventory. Only 45 percent of new Toyotas sold in October were from the 2011 model year.”