Incentives Up Sharply

June 10, 2008


Looking for a good deal on a new car, truck, or crossover? It may be a good time to check out the nearest showroom. Watching sales plunge to their lowest levels in years, frantic automakers are sharply ramping up rebates and other incentives.


The industry had been hoping to hold back. Incentives not only hurt a brand’s image but devastate used car residuals – that means lower trade-ins and higher lease payments. But with the industry’s May sales plunging to little more than 15 million, on an annualized basis, domestic and import manufacturers have grudgingly come to realize they have no choice.

The numbers were already fast on the rise, according to a report from Edmunds, which estimated that the typical vehicle sold in the U.S. carried $2,483 in givebacks last month. That’s up 5 percent from year-ago levels and 5.6 percent from April of this year.


Not surprisingly, Detroit spent the most on incentives, at an average $3,489, or $266 more than in April. Chrysler had the most lavish offerings, coming to $3,714.

Europeans came in close behind, at $2,935, a nearly 10 percent jump for the month. That has to hurt, considering makers like BMW and Volkswagen are already swallowing hard because of the weak dollar.


South Korean makers, coincidentally, also averaged $2,935 in givebacks, though that figure was the rare monthly decline – down by $224 from April.

Even the Japanese showed a big increase, rising to $1,324 per vehicle. And that doesn’t include some of the soft givebacks the Japanese favor, where they provide sales assistance to dealers, who can then pass some of that onto reluctant buyers to sign on the dotted line.


Across the board, the biggest incentives were available on light trucks, especially full-size pickups.


Barring some unforeseen shift in direction, look for even bigger givebacks when June’s numbers are tallied.

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