Tags: Automakers | cars | gm | ford | chrysler | Incentives

Automakers Reduce US Incentives in April to Five-Year Low

Wednesday, 04 May 2011 12:07 PM

Automakers reduced spending on discounts and incentives for U.S. customers in April by 14 percent to an average $2,320 per vehicle, the lowest in more than five years, as sales climbed.

Ford Motor Co.’s average spending on discounts and promotions declined 20 percent from a year earlier to $2,399, Woodcliff Lake, New Jersey-based Autodata Corp. said yesterday. Chrysler Group LLC lowered spending 23 percent to $2,806, and General Motors Co. reduced incentives by 8.1 percent to an estimated $3,068 per vehicle.

Automakers are likely to continue commanding higher prices for new vehicles as production in Japan falls because of the March 11 earthquake, analysts at JPMorgan Chase & Co. and Citigroup Inc. wrote. The industry’s incentive spending in April was the lowest since October 2005, when it was $2,204 per unit, David Lucas, an analyst for Autodata, said in an e-mail.

“The outlook for incentives is that they are going to be down dramatically,” Jesse Toprak, vice president of industry trends at TrueCar.com in Santa Monica, California, said yesterday in a telephone interview.

GM isn’t offering cash rebates on any 2011 models of its Cadillac luxury brand, according to AIS Rebates, which provides incentive data to dealers. The largest U.S. automaker won’t offer buyers rebates on Chevrolet Cruze and Aveo small cars or the Chevy Equinox and GMC Terrain sport-utility vehicles, according to Ann Arbor, Michigan-based AIS.

Toyota Cuts Spending

Toyota Motor Corp. reduced spending $60, or 3.1 percent, to an estimated $1,885 per unit in April, Autodata said. The world’s largest automaker lowered incentives for May and will focus deals on Tundra pickups and Camry sedans, Bob Carter, Toyota’s group vice president for U.S. sales, said yesterday on a conference call. The Toyota City, Japan-based automaker had a 47-day supply of vehicles at the start of May, he said.

Toyota is offering buyers in the Los Angeles area a $1,000 cash rebate for the Tundra and 1.9 percent financing for 60 months on Tundra and Camry, according to a May incentive program notice sent to dealers yesterday.

GM’s inventories of the Equinox and Terrain are lower than the company would like, Don Johnson, vice president of U.S. sales, said on a May 2 conference call with reporters.

GM’s Truck Discounts

GM’s truck inventory rose to more than 275,000 at the end of April, Johnson said yesterday, from 264,000 a month earlier. The automaker is offering rebates of as much as $4,505 for Silverado and Sierra pickups, according to AIS.

Ford sales analyst George Pipas declined to provide information on the Dearborn, Michigan-based automaker’s May incentives.

Industrywide light-vehicle sales ran at a seasonally adjusted annual rate of 13.2 million in April, Autodata said yesterday, accelerating from a year earlier and exceeding the 13 million pace that was the average estimate of 12 analysts surveyed by Bloomberg. The rate topped 13 million for the third straight month as gas prices rose to the highest in almost three years.

“April sales provided evidence that U.S. auto industry pricing is firming nicely, likely more than offsetting mix erosion pressures induced by high gas prices,” Himanshu Patel, a New York-based analyst for JPMorgan, wrote today in a research note.

Honda Motor Co., fourth in the U.S. sales by volume, raised incentives to $2,171 in April, 8.7 percent more than a year earlier, according to Autodata. Nissan Motor Co. reduced discounts by 33 percent to $1,998.

Japan-based automakers such as Toyota, Honda and Nissan may lose more than 200,000 new-vehicle sales this year due to disruptions in supply related to the March earthquake, Itay Michaeli, a Citigroup analyst, wrote in a research note.

The production loss provides a $1.3 billion profit opportunity based on market share, excluding the expectation that pricing will continue to improve, said Michaeli, who’s based in New York.

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Automakers reduced spending on discounts and incentives for U.S. customers in April by 14 percent to an average $2,320 per vehicle, the lowest in more than five years, as sales climbed. Ford Motor Co. s average spending on discounts and promotions declined 20 percent from...
Wednesday, 04 May 2011 12:07 PM
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