Edmunds.com Reports True Cost of Incentives: European Automakers' Incentives Nearly Match Big Three on Per Vehicle Basis

SANTA MONICA, Calif.--June 1, 2006--Edmunds.com, the premier online resource for automotive information, projected today that the average automotive manufacturer incentive in the U.S. was $2,416 per vehicle sold in May 2006, up $119, or five percent, from April 2006, and down $150, or nearly six percent, from May 2005.

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

The industry's aggregate incentives spending is estimated to have totaled approximately $3.67 billion in May, up from $3.32 billion in April. Chrysler, Ford and General Motors spent an aggregate of $2.54 billion, or 69 percent of the total; Japanese manufacturers spent $698 million, or 19 percent; European manufacturers spent $318 million, or nine percent; and Korean manufacturers spent $127 million, or three percent.

According to Edmunds.com, combined incentives spending for domestic manufacturers averaged $3,116 per vehicle sold in May, up from $3,009 in April 2006. Compared with last month, Chrysler's incentives spending was up $100 to $3,642 per vehicle sold; Ford's incentives spending was down $94 to $3,200 per vehicle sold; and General Motors increased its incentives by $273 to $2,774 per vehicle sold.

From April to May, European automakers increased incentives spending by $182 to a record high $3,037 per vehicle sold; Japanese automakers increased incentives spending by $146 to $1,325 per vehicle sold; and Korean automakers decreased incentives spending by $12 to $1,780 per vehicle sold.

"The European automakers have been quietly increasing their incentives, mostly through subsidized leases," remarked Dr. Jane Liu, Vice President of Data Analysis for Edmunds.com. "Last May, European automaker incentives averaged $1,877 per vehicle and the domestics averaged $3,524. It is remarkable that their averages are now less than $100 apart."

Comparing all brands, in May Scion spent the least, $74, followed by Porsche at $469 per vehicle sold. At the other end of the spectrum, Lincoln spent the most, $6,859, followed by Jaguar at $6,565 per vehicle sold. Relative to their vehicle prices, Mercury and Jeep spent the most, 17.2 percent and 16.4 percent of sticker price, respectively, while Scion and Porsche spent the least at 0.5 percent and 0.7 percent, respectively.

Among vehicle segments, large SUVs continued to have the highest average incentives, $4,783 per vehicle sold, followed by large trucks at $3,823. Sport cars had the lowest average incentives per vehicle sold, $546, followed by compact cars at $893. Analysis of incentives expenditures as a percentage of average sticker price for each segment shows large SUVs averaged the highest, 12.7 percent, followed by large trucks at 12.5 percent of sticker price. Sports cars averaged the lowest, 1.9 percent, followed by compact cars at 5.3 percent of sticker price.

About Edmunds.com True Cost of Incentives(SM)(TCI(SM))

Edmunds.com's TCI(SM) is a comprehensive monthly report that measures automobile manufacturers' cost of incentives on vehicles sold in the United States. These costs are reported on a per vehicle basis for the industry as a whole, for each manufacturer, for each make sold by each manufacturer and for each model of each make. TCI covers all aspects of manufacturers' various incentives programs (except volume and similar bonus programs), including dealer cash, manufacturer rebates and consumer savings from subvented APR and lease programs (including subvented lease residual values used in manufacturer leasing programs). Data for the industry, the manufacturers and the makes are derived using weighted averages and are based on actual monthly sales and financing activity.

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