VW Incentives Leads the Pack

DETROIT, April 2, 2004; Michael Ellis writing for Reuters reported that Volkswagen AG (XETRA:VOWG.DE - News) led all automakers with the steepest rise in U.S. incentives in March, raising its sales offers by an average of $800 per vehicle as it battles both an aging vehicle lineup and the negative impact of a stronger euro.

VW boosted its incentives to an estimated $2,400 per vehicle in March, from under $1,600 per vehicle in February, industry research group Autodata said on Friday.

But the higher incentives weren't enough to stop U.S. sales for the combined VW and Audi brands from dropping nearly 12 percent last month, and 22 percent for the first three month of this year.

"They're in a little bit of a rough spot," said Autodata Vice President Dave Lucas, noting that the bulk of the lineup for the VW brand is several years old.

Last month, Europe's largest automaker announced plans to slash 5,000 jobs as part of a cost-cutting drive as it warned of a "lousy" first quarter on top of last year's slump in profits, partly due to unfavorable exchange rates.

Ford Motor Co.'s Volvo brand also raised its incentives sharply in March, by an average of about $600 to about $3,700 per vehicle, Lucas said.

The Mercedes arm of DaimlerChrysler AG boosted its incentives slightly, while BMW AG and the Saab brand of General Motors Corp. were flat, Lucas said.

Detroit's Big Three automakers still offered the highest incentives in the industry, with an estimated average of $4,033 per vehicle, up about $114 from $3,919 in February, according to Autodata.

GM and its rivals Ford Motor Co. and the Chrysler arm of DaimlerChrysler AG all ratcheted up incentives on Thursday as the U.S. car companies reported mixed sales results for March.

The new incentives indicated that the U.S. automakers intended to spend heavily to help boost sales rather than cut production, analysts said.

GM continued to lead all automakers with an average incentive of $4,266 per vehicle, but its incentives rose only $55 from February.

Chrysler's average incentive rose to $4,181 per vehicle, up about $174 from February, while Ford raised its incentives by about $161 to $3,604 in March, Autodata said.

Asian brands continued to offer the lowest incentives in the industry, with an average of $1,432 per vehicle in March, up from $1,325 in February.