Incentives Decline as 2007 Inventory Dwindles

Santa Monica, CA. –November 1, 2007–Edmunds.com,the premier online resource for automotive information, estimated today that the average automotive manufacturer incentive in the U.S. was $2,195 per vehicle sold in October 2007, down $162, or 6.9 percent, from September 2007, and down $89, or 3.9 percent, from October 2006.

Edmunds.com’s monthly True Cost of Incentives(SM) (TCI(SM)) report takes into account all automakers’ 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.

According to Edmunds.com, combined incentives spending for domestic manufacturers averaged $3,145 per vehicle sold in October 2007, down from $3,241 in September 2007. From September to October, European automakers decreased incentives spending by $765 to $2,042 per vehicle sold; Japanese automakers decreased incentives spending by
$141 to $1,045 per vehicle sold; and Korean automakers decreased incentives spending by $191 to $1,500 per vehicle sold.

In October, the industry’s aggregate incentive spending is estimated to have totaled approximately $2.71 billion, down 12.0 percent from September. Chrysler, Ford and General Motors spent an aggregate of $1.96 billion, or 72.2 percent of the total; Japanese manufacturers spent $486 million, or 17.8 percent; European manufacturers spent $193 million, or 7.1 percent; and Korean manufacturers spent $79 million, or 2.9 percent.

“Incentive averages declined because the majority of vehicles being sold now are 2008 model year and don’t require overly generous marketing support,” stated Jesse Toprak, Executive Director of Industry Analysis for Edmunds.com. “This typically occurs later in the
calendar year, but in 2007 we had earlier model introductions as well as dramatic production cuts that reduced available inventory.”

True Cost of Incentives for the “Big Six” Automakers

Automaker Oct. ’07 Sept. ’07 Oct. ’06

Chrysler– $3,171—— $3,713—— $4,149

Ford—— $3,208—— $3,101—— $3,322

GM——– $3,118—— $3,132—— $2,575

Honda— $653—— $1,023—— $458

Nissan—- $2,177—— $2,031—— $2,407

Toyota– $710—— $830—— $713

Among vehicle segments, large trucks had the highest average incentives, $4,188 per vehicle sold, followed by large SUV’s at $4,160. Compact cars had the lowest average incentives per vehicle sold, $849, followed by sport cars at $1,125. Analysis of incentives expenditures as a percentage of average sticker price for each segment shows large trucks averaged the highest, 13.2 percent, followed by large cars at 11.2 percent of sticker price. Luxury sports cars
averaged the lowest, 2.2 percent, followed by sports cars at 3.8 percent of sticker price.

Comparing all brands, in October Mini spent the least — virtually nothing, followed by Scion at $109 per vehicle sold. At the other end of the spectrum, Cadillac spent the most, $4,953, followed by Saab at $4,790 per vehicle sold. Relative to their vehicle prices, Saab and Mercury spent the most, 14.5 percent and 13.0 percent of sticker
price, respectively, while Mini spent virtually nothing and Scion spent just 0.6 percent.

“It wasn’t long ago that the big spenders invested over $7,000 per vehicle,” commented Edmunds’ AutoObserver.com Senior Editor Michelle Krebs. “Automakers are really sticking to their guns, staying true to the real-world pricing strategy they have talked about.”

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