Chrysler once again topped Edmunds’ True Cost Of Incentive index last month, despite failing to significantly improve its sales over February 2009′s miserable showing. The only upside is that Chrysler basically held even with reduced incentives, as the entire industry is spending about 14 percent less on incentives than it did a year ago. Another interesting point of analysis from Edmunds:
Comparing all brands, in February smart spent the least, $341 followed by Scion at $426 per vehicle sold. At the other end of the spectrum, Lincoln spent the most, $5,568, followed by HUMMER at $5,195 per vehicle sold. Relative to their vehicle prices, Saturn and HUMMER spent the most, 14.9 percent and 13.6 percent of sticker price, respectively; while Porsche spent 1.4 and smart spent 2.3 percent.
But Toyota and GM will help carry those numbers up next month, with huge incentive spends planned. Meanwhile, after many automakers found religion about retail sales last year, fleet sales are back in a big way. And they’re no longer seen as something to be ashamed of.
Automotive News [sub] reports that only 35,832 of Chrysler’s 84,449 sales last month were to retail customers, with the remaining 58 percent going to fleets. Despite the fact that this combined with Chrysler’s chart-topping incentives doesn’t exactly speak to the company’s viability, Chrysler spokesfolks were unapologetic, saying:
Fleet sales were very strong this month, and our company sales reflect that. We still expect our total fleet sales for the year to be around 25 percent. It’s a good viable business for us. It shows that large companies have faith in our company to order. We make money on fleet sales
And none of the automakers are being snobbish about fleet sales. Ford’s fleet sales rose 74 percent compared to last February, and GM’s fleet sales rose 114 percent, making up nearly a third of all GM sales according to Automotive News [sub]. GM’s leasing (another former sin) also rose last month, to make up ten percent of all deliveries.
This time last year, fleet sales, incentives and leasing were considered part of the huge collection of problems that brough American automakers to their knees. Now that they’ve received their bailouts, the old habits are coming right back. And there are always excuses: sure they make some profit and yes, they will always be part of the business. But with incentives going up and Toyota looking vulnerable, a discount war is looming on the horizon. If Detroit once again gets caught up in a negative spiral of volume-pushing through incentives, fleets and leasing, any chance of a sustainable turnaround could be hamstrung. Those who fail to learn the lessons of the last several years have no business being in business.