When we reported sales on Monday our conclusion was that “big is big again,” as full-sized pickups dominated growth in a surprisingly up month. So, how do you sell a ton of trucks in a month where gas was still hovering around the $3.50/gal mark? Easy: just throw some cash on the hood. Edmunds Autoobserver reports

From a low that generally occurred around April, Ford Motor Co., General Motors Co. and the Chrysler Group LLC have markedly hiked incentive spending on full-size pickups. In April, the average TCI for the full-size pickup category – which also includes the almost statistically insignificant Toyota Tundra, Nissan Titan and Honda Ridgeline – was $3,261 per vehicle. At the end of September, the average incentive for full-size pickups ballooned by more than 30 percent to $4,281 per vehicle.

Executives from the Detroit automakers insist that this was not simply an inventory-clearing move (because, by industry standards, having three times your monthly sales on the lot is “acceptable”), but manufacturers have been trimming truck production all year and with Days To Turn rising, clearing off the lots makes sense. Especially going into the traditionally slow truck sales months of October and November. Hit the jump for more September incentive and transaction price data…

Edmunds gives the overall incentive crown to GM, but the biggest gains came from Honda which boosted spending from the previous month and year-over-year.

But if you express incentives as a percentage of transaction price, as TrueCar does, Chrysler is actually the bigger loser for September… which helps explain why it had one of the biggest volume jumps of the month.

The main tool for the government’s crusade to get one million plug-in cars on the road by 2015 is the “Qualified Plug-In Electric Vehicle Tax Credit,” a credit that returns between $2,500 and $7,500 to purchasers of a qualifying vehicle. To qualify for the minimum $2,500 credit, a vehicle must have a traction battery with a minimum of four kW/h, and the credit adds an additional $417 in credits for every kW/h above the minimum. Why? Well, you might think that it’s because the DOE has done its research and determined that larger battery packs deliver more social benefits… at least until the 16kW/h limit (the exact size of the Chevy Volt’s battery), where the credit tops out at $7,500. But according to new research by Carnegie Mellon’s Jeremy Michalek, that basic assumption doesn’t appear to be true at all. In fact, his latest paper argues that the government would actually be better off subsidizing smaller, not larger, battery packs.

In an in-depth evaluation [PDF] of plug-in hybrids (PHEVs), large-battery EVs, smaller-battery EVs, Hybrids and conventional cars, Michalek and his colleagues found that

Current subsidies intended to encourage sales of plug-in vehicles with large capacity battery packs exceed our externality estimates considerably, and taxes that optimally correct for externality damages would not close the gap in ownership cost. In contrast, HEVs and PHEVs with small battery packs reduce externality damages at low (or no) additional cost over their lifetime. Although large battery packs allow vehicles to travel longer distances using electricity instead of gasoline, large packs are more expensive, heavier, and more emissions intensive to produce, with lower utilization factors, greater charging infrastructure requirements, and life-cycle implications that are more sensitive to uncertain, time-sensitive, and location-specific factors. To reduce air emission and oil dependency impacts from passenger vehicles, strategies to promote adoption of HEVs and PHEVs with small battery packs offer more social benefits per dollar spent.

Back in 2009, Michalek made the core of this argument in an interview with Spectrum Magazine

Spectrum: So if you have to make a choice—big or small batteries for plug-in hybrids—which is best?

JM: From what we’ve found, if you have a higher-capacity plug-in, something like the Volt, it could lower greenhouse-gas emissions for some drivers, but that comes at a cost that wouldn’t be paid back by fuel savings. A $100-a-ton carbon tax doesn’t even do it.

On the other hand, a driver who is able to charge frequently would do well to buy a small-capacity plug-in. This person might not care at all about the environment or about the nation’s dependence on foreign oil, yet he or she would still benefit from buying such a vehicle.

Places where the economic, environmental, and national-security objectives are all well aligned—that’s where you’d want to break in a new technology. I would say to carmakers, go after those people. And to consumers: Buy small, charge often.

The Volt would be the poster-boy for Michalek’s critique: it has the minimum battery size needed to claim the full $7,500 tax credit, and yet its creators admit that it was developed for a consumer use profile rather than ultimate efficiency. Whether the Volt was developed to exactly hit the government’s kW/h credit limit, or if the limit was tailored to the Volt isn’t clear… but what is clear is that incentivizing smaller batteries will do more per dollar spent to displace oil. As Michalek tells Bloomberg

It’s not that large battery packs are bad, it’s that they are not providing as many benefits per dollar. Ordinary hybrids increase fuel economy substantially, and the incremental cost of those systems is getting relatively small.

Meanwhile, the timing of this report is very interesting: Reuters reports that the DOE is about to reveal its own research into EV incentives, and will be pushing to spend more money on Obama’s goal of putting a million EVs on the road.

Energy Secretary Steven Chu is due to unveil the results of a major review of research spending on Tuesday, one that could shift research dollars away from clean electricity and biofuels toward electric vehicles and modernizing the power grid.

The first-ever “Quadrennial Technology Review” prioritizes research that can be commercialized within 10 years, and research that could make a substantial dent in oil use and greenhouse gas production in the next two decades.

But will the DOE’s renewed push for EV proliferation reflect the sober analysis of scientists like Michelak, or will they be more wink-nudge games, in which the industry sets the policy agenda? After all, there are already plenty of reasons for the industry to keep electrified automobiles in a high-price ghetto, and the government has thus far been more than happy to play along with that game. But if this country is serious about reducing oil dependence, plug-in technology needs to be proliferated in the most efficient way possible. That means fewer handouts to luxury EV firms like Fisker and Tesla, and a more rational approach to consumer subsidies, as outlined by Michelak.

Cash on the hood is on the rise again, says Edmunds, which keeps track of the Total Costs of Incentives (TCI.) Incentives definitely had been coming down from their January and February highs to reach a low in May (there were cars missing from Japan …), but now, manufacturer largesse is getting greater again.

The most generous: The Detroit 3, led by Dodge. If you want a deal, buy American. Full trends in the Excel sheet, courtesy of Edmunds.

GM China always had a comfortable lead over Volkswagen in China – at least on paper. More than half of GM China’s volume comes from small delivery vans, made by a three-way joint venture with SAIC and Wuling, in which GM held 34 percent. This share had been recently raised to 44 percent. The joint venture agreement allows GM to claim 100 percent of the small cars as theirs. “Whatever turns them on” (or Chinese word to that effect) say the other JV partners who happily count the cars again in their annual reports. There is one big problem with that. The “breadvan segment” (so called because the cars looks like loafs on wheels) has been shrinking and is ruining GM’s otherwise good Chinese numbers.  Now, GM can’t take it anymore, and is using a familiar tactic: “GM is sacrificing profit margins to maintain market share in China, cutting prices of low-cost minivans by as much as 15 percent to offset slowing sales in the world’s largest vehicle market,” Bloomberg reports.

“GM does not rely on the minibus for profit,” said Jenny Gu of J.D. Power China. “They only contribute volume.” At 15 percent off, the already razor-thin margin could evaporate. Now remember when we were young and swore we would stop when we need glasses? Same here.

“We made some short-term focused promotions to help the overall market situation,” Matthew Tsien, VP at SAIC-GM-Wuling, told Bloomberg. “We don’t expect it to be a long-term issue.”  Same here.

The best-selling Wuling Sunshine minivan has been reduced to 28,000 yuan ($4,384) from 33,000 yuan earlier this year, according to GM.

Before the price reduction, SAIC-GM-Wuling made about 2,000 yuan ($313) on average for every minivan, says J.D. Power. GM’s 44 percent stake would translate to $138 per car.

In the meantime, Volkswagen is breathing down GM’s neck. GM sold 1.27 million vehicles in China in the first six months, 641,000 of those Wulings (see table.) Volkswagen sold 1.1 million cars in the same time in China, none of them cheap minivans.

Forecasting the success of game-changing technologies is like predicting the weather. Despite a mediocre success rate, it is done every day. Ask me what the weather will be in 2017, and if I want to be absolutely right, I will say: “During the summer months, we expect sun with occasional rain, whereas in the winter months, some snow can be expected.” This prediction would protect my career in any company, but it won’t get me any press.

If I want press, I need to say: “In 2017, fire and brimstone will rain from the skies, which will cause a great conflagration, because all rain will have stopped a year earlier.” These predictions can be made with little risk. Six years down the road, who will remember the nonsense I said today? That thought crosses my mind as I read studies that predict the adoption of electric vehicles. Today, we have two of those. They couldn’t be more apart. We commissioned a third one.

A new report from Pike Research says cumulative global sales of plug-in electric vehicles (both plug-in hybrids and pure EVs) will reach 5.2 million units by 2017. Also in 2017, Pike sees cumulative global sales of 8.7 million hybrids. I am not commenting on the first number. The last number sounds awfully low: In March 2011, Toyota alone had already sold more than 3 million hybrids. The global sales number of all hybrids was around a million last year.

The charitable thought that Pike has its “cumulative” messed up (it usually stands for “all cars sold up until that point”) is derailed by another prediction by Pike. Pike thinks that by 2017 plug-ins and hybrids will represent a global market share of about three percent. According to Pike,

“Adoption will be highest in North America, where electrified vehicles will capture 4.9 percent of the total light-duty vehicle market in that year.”

The other report was released a while ago by the Boston Consulting Group. Their report wisely predicts that “the electric car will face stiff competition from ICEs when competing solely on the basis of TCO economies and, hence, will not be the preferred option for most consumers.”

BCG hopes that “there is a distinct “green” consumer segment that will be willing to pay a significant premium for EVs even if the total cost is higher.”

And where will most these EVs be sold? The Boston Consulting Group has a different opinion than Pike:

“China and Europe – not the U.S., as many believe – will be the largest markets for EVs in 2020.

China is a major wildcard. Assuming that the government remains committed to EVs, BCG projects that these vehicles will represent 7 percent of the country’s new-car sales in 2020. Despite this moderate penetration, China will become the world’s largest market for EVs due to its overall market size.

Europe will become the second-largest market for EVs in 2020 with a projected 8 percent share of new-car sales, supported by consumers’ willingness to pay for green technologies, the region’s stringent emissions standards, and high gasoline and diesel taxes.”

BCG sees EVs and hybrids reach 15 percent of aggregate new-car sales in the four major markets (North America, Europe, China, and Japan) in 2020. They don’t give a global number, at least not in the free version of the study. But these markets represent the bulk of new car sales – at least today. China is indeed the wild card – for any type of car. My spreadsheet has total Chinese car sales at 60-70 million by 2020, with a – by world standards – still moderate car penetration of around 300 per 1000. Currently, the number is around 60 per 1000.

Last year, global production of all types of automobiles was 78 million, with China contributing 18 million. Add in India, and world car production can easily double by 2020. A 15 percent share would be 23 million EVs and hybrids in the year 2020 alone.

Pike and BCG clearly differ, both in numbers and main markets. So we asked our prediction champions at Edmunds what they think. John O’Dell, Senior Editor at Edmunds AutoObserver/Green sees it this way:

“EVs will have more traction in Europe and China because travel distances there for most drivers are relatively short – public transit is often used for longer trips – and because in Western Europe and China there are strong governmental programs aimed at promoting use of alternatives to gasoline and diesel, and electricity is one of the most readily available alternatives.

In the U.S., where driving distances typically are longer (even though most US drivers commute far less than 60 miles a day during the work week, longer trips on weekends are not uncommon) the range-extended plug-in hybrid and conventional hybrids are likely to far outsell all-electric (or battery-electric) vehicles for years to come.”

The problem with all these predictions is that they use logic. Gas and diesel easily cost double in Europe compared to the U.S. Logic dictates they all drive electric vehicles by now. They don’t. Even the adoption rate of hybrids is homeopathic. In 2010, the adoption rate for hybrids and EVs stood at 0.8 percent in Germany.

Logic is even more thrown off by the fact that fuel prices fluctuate wildly across Europe. Oddly enough, they are highest in Norway, the Saudi Arabia of Europe. How does $10/gal grab you? If you want to get gas “cheaply” (like $7 a gallon), you need to go to Latvia or Luxembourg. Nevertheless, the needle on the adoption-meter in Europe doesn’t even quiver. What moves is the mileage-meter. The average new car registered in 2001 in Germany used 8 liters of gasoline per 100 km and 6.4 liters of diesel. By 2010, this had dropped to 6.5 liters of gasoline per 100km and 5.8 liters of diesel – across all cars, from Mini to S-Class. 5.8 l/100km is 40mpg (non-EPA).

In China, the price of gasoline is higher than in the U.S. (between $4.75 and $5.30/gal, depending on grade and currency rate,) but it still is not as outrageous as in Europe. Sales of EVs and hybrids? The Guardian cites a report by IHS Global Insight that says that exactly one Prius was sold in China in 2010. The Guardian promptly found an anonymous industry observer who quipped that “it may be a domestic rival that bought the hybrid to strip it down and see how it works.” Chinese clichés are always fun, but at that take rate the Chinese won’t even bother taking a Prius apart.

I don’t see this situation to change quickly. Europeans may have outrageous gasoline prices, shorter driving distances and that fabled public transport. Nevertheless, purchasing decisions are usually driven by such illogical considerations as visiting the in-laws 300km away, and touring Tuscany next summer. As the stats above show, if they want to save gas, they drive diesel. European governments are very reluctant when it comes to EV subsidies, they need their money for other things. European drivers are very reluctant when it comes to changing habits at the pump, witness the recent buyer’s strike against ethanol.

The wild card in the EV game indeed is China. The wild card could be an 8, which stands for good luck, or a 4, which stands for death. We have chronicled China’s flirtations with electric vehicles extensively at TTAC, but currently, it is all talk and little action. Even generous subsidies can’t convince Chinese to drive electric. Even after subsidies, regular cars are cheaper. And most of all: No EVs to buy.

China has the power to force people to go electric. Any amount of Chinese coercion usually results in howls of protests from western media. Ordering Chinese to drive electric on the other hand results in applause. Even Gordon Chang, designated China-hitter on Fox and Forbes, demands more “policy support” – euphemism for raw force.  The problem is that it’s not working.

“Beijing has already begun restricting new licence registrations. Sales have flattened,” reports the Guardian.

“Restricting new license registrations?” If I want to buy a new car in Beijing, I have to enter a lottery for a license plate. Roulette has better odds.

“Flattened?” Cratered is the better word. China Daily reports that in the first half of 2011, only 154,200 automobiles were sold in Beijing, 59.2 percent below the same period in the previous year. What sells in Beijing is plywood to board-up car dealers.

Beijing, with a population similar to all of Australia, would be the ideal market for EVs. China Daily explains why, and why not:

“To buy a conventional gasoline-driven car in Beijing, customers have to wait for months to obtain a registration plate through a lottery system because of the Chinese government’s tightened purchasing policies.

There is no such limitation on electric cars, however, as the government seeks to encourage sales of new-energy vehicles.

In addition to a zero-rate purchase tax, buyers of electric vehicles can enjoy the benefits of a total price reduction of 120,000 yuan ($18,600) for each car as a result of central and local government policies designed to stimulate purchases.

The Chinese capital is one of 25 pilot cities chosen for large-scale promotion of electric vehicles.

However, sales remain low. Few brands have started to sell their wares through dedicated dealers and only a very small number of charging stations have been established in the city. Those that have been set up are currently lying idle.

Apart from the lucrative stimulus packages, all the other requirements, including infrastructures, the markets and even the cars themselves, are not ready.”

It does not look like this will be changing anytime soon. Apart from great announcements, nobody seems to be in a great hurry to make product.

There is one company that has a proven, mass produced pure plug-in: It is Nissan and its Leaf.

Nissan has quietly advanced to the largest Japanese manufacturer in China. Nissan sold 1.3 million units in China in 2010 and wants to nearly double this by 2015. Nissan could sell Leafs in Beijing tomorrow to plateless and eager customers.

But Nissan won’t. Nissan will introduce a pure plug-in under the Chinese Venucia brand – by 2015. Nissan’s joint venture partner in China is state-owned Dongfeng. Carlos Ghosn could use the Chinese volume for his Leaf technology – but he is not stupid. Both Nissan and Dongfeng have their reasons for going slow.

The question “why not earlier than 2015?” gets you an inscrutable Chinese smile, or a Gallic shrug, depending on who you ask.

Both Pike and Boston Consulting will gladly sell you their studies and hope that you will hire them for ongoing consulting services. If you pay their fees, they will tell you what you want to hear. I am inclined to listen to the free advice by John O’Dell of Edmunds:

“I don’t believe that battery-electric vehicle (BEVs) will become the dominant type of personal vehicle in either Europe or China as automakers have billions invested in internal combustion engine technology and can still wring quite a bit more fuel economy out of that technology (some experts say it will be possible to boost average internal engine fuel efficiency by 30-35 percent over the next 25 years). The higher costs and range limitations of BEVS will keep them form being he primary vehicle in most garages.”

There is another thought that crosses my mind when I write about predictions. Before the IBM PC was launched in 1981, IBM had done extensive studies. The overall market for such a device was seen limited to 5,000. I kid you not. 5,000 pieces total. My agency had the European account for IBM, and I had their data.

We all know how that worked out.

We didn’t want to mention it when we wrote about GM’s buy a car, get free insurance deal. If we would have said it, it would have been the nasty B-word all over again. The rest of the media showed less compunction. “The worse you drive, the bigger the deal” headlined MSN Money. The deal can be staggering under the right or wrong circumstances, says MSN Money:

“For a busy Seattle family with two teenage boys — one of whom has a speeding ticket? We ran comparison quotes on a shiny new 2011 Chevrolet Tahoe LTZ. The lowest premium we found was $4,890 a year; the highest was $10,300.”

MSN interviewed Jessica Caldwell  of Edmunds.com (video here, no embed,) and she had this to say:

“It looks like anyone can qualify. So if you are that 22 year old living at home, and your mom and dad have disposable income and want to buy a Camaro, sign up for it.”

So is that what he meant when GM spokesman Tom Henderson said that many potential new car buyers found it difficult to afford insurance for a new vehicle?

The US market’s Seasonally Adjusted Annual Selling Rate (SAAR) hurdled the 12m mark towards the end of last year, and was cruising above the 13m mark for much of the first half of 2011, but after a rough May, June seems set to become the market’s second month back under the 12m mark.

Not every analyst agrees with Edmunds’ sub-12m SAAR projection, with some forecasting [via Bloomberg] as high as 12.2m and others guessing as low as 11.8m, but one thing is certain: everyone thinks Detroit will pick up sales compared to their June 2010 numbers, with GM’s pickup predicted to be in the 14-20% range, Chrysler in the 20-30% range and Ford in the 8-15% range. The big losers: Honda and Toyota, both of which are expected to lose sales compared to last June.

Toyota says inventories “bottomed out” in June, and all three of the major Japanese automakers increased incentives noticeably in a play to keep customers, although GM and Chrysler still top TrueCar’s incentive forecast. And, according to Barclays Capital analyst Brian Johnson, low inventory might not be as big of a problem as strong pricing:

Light-vehicle sales ticked up only slightly in June as many potential buyers continued to defer their purchase amid high car prices and limited inventories. Despite some indication last month that Japanese (automakers) were ready to cut prices as post-quake production resumed, pricing has remained strong in June, likely leading many buyers to defer purchases.

The solution then might seem obvious: lower prices. But some fear that something else is playing out in the falling sales. Reuters reports that

Auto sales, to be reported on Friday, are an early indicator of consumer spending each month… some economists, including Peter Morici at the University of Maryland, see signs that a second recession may be “in the wings”

Not so, says Ford economist George Pipas, who tells Bloomberg

Industrywide sales have been hurt by “the lack of availability of some popular products in May, June and probably July” because of the March 11 earthquake and tsunami in Japan, Pipas said. “When they come back on line, we’ll do as well as we did in the first four months of the year, plus we’ll have pent-up demand from people who have been deferring purchases”… The “underlying demand” is for a 13 million sales rate, Pipas said. “The economy is expanding, income is expanding, the population is growing and cars are getting older… The likelihood of a double dip is not even on our radar screen”

But even if the overall market recovers from what Ford and Pipas see as a two-month dip, GM is exhibiting symptoms of another, potentially troubling, industry trend: strong cars sales. Wait, I mean weak truck sales. Reuters reports that Chevrolet’s car sales made up the majority of the brand’s volume for the third month in a row, the first time the bowtie brand has achieved that feat since 1991. Chevy sales boss Alan Batey tells Reuters

We have been a very, very strong trucks brand and frankly have underperformed in cars. It’s as simple as that. You have to go back a long way to see a car performance this strong. Although the cars will remain robust and strong, I expect the trucks will come back somewhat in the second half of the year.

Of course it’s not “as simple as that” though. Batey may only be able to use words like “strong” and robust” to describe car sales, but the view is a little different from the dealer level. The owner of New York’s largest Chevy store tells Bloomberg

June started off briskly but has slowed down. Car sales were consistent but our truck business was definitely soft. What is alarming is that we’re not seeing the truck and SUV traffic we have been seeing.

But, at the end of the day, Ford and GM are picking up sales in the short term… which makes it easier to be optimistic about the longer-term picture. But if trucks sales are slowing, buyers are waiting for Japanese-brand inventories to pick up before buying, and GM and Chrysler still have the highest incentives in the industry, Detroit is not going to make as much hay off the post-tsunami chaos as they probably hoped to. It’s beginning to look like the opportunity to take a few free shots at Toyota and Honda’s US-market dominance may be lost already…

So, sales are up… but what are the automakers spending in order to get those sales? And what are they getting for their cars? Step inside our incentives and transaction price tracking center for a look at the factors that play affect how sales turn into profits (or don’t). But first, take a look at the graph above showing US-market incentive spending broken out by the regions where automakers are based. As usual, the US-based OEMs put more cash on the hood than their competitors, but more importantly notice how much money is spent on sales each month: nearly $2.5b was spent last month. And despite being a serious chunk of change, Edmunds AutoObserver says that’s the lowest overall level of incentive spending since 2005. So if you’re inclined to ignore incentives when it comes to your monthly sales education, you might want to start paying some attention…

Here, via TrueCar, comes the important stuff: incentives as a percentage of transaction prices. Once again, GM and Chrysler are leading the pack in this dubious distinction, and GM appears to be adding incentives relative to both last month and April 2010, the only automaker trending upwards in both comparisons. But the strong declines year-over year across most of the rest of the industry are likely to only accelerate as the Japanese automakers deal with supply interruptions in the aftermath of the Japanese quake and tsunami. GM and Chrysler need to either start dialing back those incentives aggressively, or start showing strong market share gains as the competition takes cash of their dwindling number of hoods.

TTAC has always taken pride in its outsider status, and we’ve taken pains to cover the industry from a safe distance in order to continually bring a fresh perspective to developments. As a result, we’re not always on the same page as trends in the industry at large, which tends to be far more given to wild optimism than the average TTAC analysis. But, based on a new study by Booz & Company [PDF], it seems that the “carpocalypse” of recent years has driven the industry to a more TTAC-esque pessimism. According to responses by executives at both OEMs and suppliers, the industry generally feels that the bailout was either a missed opportunity or it didn’t do enough to address fundamental weaknesses… and as a result, executives see challenges ahead.

So, where is the industry now? Not much better than it was at the height of the “carpocalypse,” when GM and Chrysler were going through bankruptcy on the government’s dime. And though OEMs generally benefited more than the suppliers, the automakers themselves are less optimistic about the current state of the industry… although that might be a function of the fact that suppliers were going bankrupt by the 12-pack before the industry recognized that it was in crisis.

So, what did the bailout do right? Cutting capacity, or in less politically-palatable terms, firing people. Ironic, isn’t it, that a policy that’s being defended as a jobs-saving measure did its best work (at least according to the OEMs) when it put people out of work? Meanwhile, feel free to draw your own conclusions about the fact that the industry liked the “capacity rationalization” aspects of the bailout, while feeling like the bailout didn’t do enough. Saving jobs, as we’ve pointed out for some time, is not the same as saving companies… in fact, the two goals often clash significantly.

In any case, both OEMs and suppliers picked the government’s rescue of Chrysler as the least-positive impact of the auto industry rescue. Some 42% of OEMs feel rescuing Chrysler was negative for the industry, while 20% of suppliers sign on to the same sentiments, despite being largely positive about the GM bailout.

And here’s where the rubber hits the road: nearly 30% of the industry thinks another OEM will fail within the next two years. Risk is fundamental to every industry, but the fact that almost a third of industry execs expecting an OEM failure within the next 24 months is a searing indictment of the bailout, which was supposed to create a sense of confidence. And if GM or Chrysler fail again, all those rescue efforts will have been wasted, and every job “created or saved” will be injeopardy again.

So what to do now? Incentive and pricing discipline, long a TTAC hobbyhorse, is identified by both sides of the industry as being one of the most important tasks (the most important for OEMs). Production discipline is also identified as a key consideration, something the bailout also hasn’t been able to change. In short, the easy cuts and consolidation have been achieved, leaving only the tough challenges that require a focused, disciplined culture… and the bailout still hasn’t made a demonstrable difference in the culture of the industry, which has been flirting with a price war since the beginning of this year. The lesson: you can cut, rinse and inject cash, but ultimately, success in this industry comes down to focus and discipline, neither of which can be provided by a government bailout.

Speaking at the New York Auto Show today, GM CEO Dan Akerson defended his inconsistent approach to sales incentives, telling the AP [via The Washington Examiner]

I feel pretty good about that. I think we’re in pretty good shape. I don’t want to be a predictable competitor. I don’t want the other guy to know exactly what I’m doing.

For some context,

GM surprised the industry — and Wall Street — when it raised discounts by $400 per vehicle in January and February. Most automakers didn’t raise them because demand for new vehicles has been rising in line with supply…

GM pulled back on its incentives in March, spending $600 to $800 per vehicle less on the deals. But it was too late for some investors, who shied away from the company’s stock because higher rebates lower car companies’ profits.

But does Akerson’s upside, the element of surprise, outweigh the downsides of his hot-cold incentive strategy?

Automotive News [sub] provided evidence that GM’s incentive strategy might not be ideal earlier this month, when it reported

After a blowout February, Buick-GMC dealer Tim Dunne came down to earth last month. Sales at his New Jersey store cooled from 73 new vehicles in February to 59 in March.

The main reason: General Motors ended a loyalty cash incentive and lease pull-ahead deal that had been wildly popular with customers.

“It was kind of sobering to come off that quickly from those incentives,” said Dunne, dealer principal at T&T Coast Buick-GMC in Sea Girt, N.J.

GM’s response, via sales VP Don Johnson:

We’re very sensitive to making sure that the dealers aren’t on and off the gas too much. You’d like it to be a smooth acceleration and/or deceleration. I think we’ve done a pretty good job of that.

With sales up overall, GM’s dealers (90% of whom are profitable) could have it worse, but the complaint echoes through GM’s history. TTAC has deep archives of dealer complaints about GM’s confusing, inconvenient incentives systems. Akerson’s ability to make virtue of a vice is new, but otherwise it seem that GM still has work to do to make its incentives more effective.

Ask an industry-watcher to name an automaker that seems to be doing things right, and chances are one of the top choices would be Ford Motor Company. And though Ford is enjoying favorable perceptions in the media, according to the company’s own internal goals, it’s actually underperforming. And in a key metric, no less: retail market share. Bloomerg reports:

Ford in the first quarter had 13.6 percent of the U.S. retail auto market, which excludes sales to fleet buyers, according to researcher Edmunds.com. That trailed the 14.1 percent target Ford’s board set for executives to match or exceed this year, according to the Dearborn, Michigan-based automaker’s government filings.

Though Ford outsold GM last month in terms of pure volume, and though GM’s retail market share seems to have been at one of its lowest levels in years, it was still higher than Ford’s (15.6% compared to 13.6%). Last year, Ford hit only 44% of its corporate market-share goal and 58% of its target for the American markets, while coming up .1% short of its 14.2% US retail market share goal. Still, Ford’s strong profitability last year points to the fact that market share isn’t everything, even though retail market share is heavily weighted in Ford’s executive bonus formula (as it reflects “consumer acceptance”). But will Ford continue to give up market share in order to protect profits if executives have incentives to “buy” market share with spiffs? At this point, only time will tell…

Just two short months after Hyundai CEO John Krafcik warned that a brewing incentive and price war was “a step backward for the industry” and “short-term thinking in a long-term process that hurts manufacturers and consumers,” it seems that any signs of a price war are over. But before you rush to give a certain earthquake/tsunami combo credit for the entire situation, consider for a moment that Ford has now joined Toyota in raising prices while insisting it has nothing to do with supply interruptions. A Ford spokesman tells the Detroit News that

This is the second price increase this year [Ed: Ford bumped prices by $130 in January] but has been in the works for months as the industry faces higher commodity costs

Meanwhile, Ford is also the only Detroit-based manufacturer to bring incentives below nine percent of its average transaction price, as its March incentives were down nearly 10 percent compared to March of 2010. Between Ford and Toyota bringing up prices and Hyundai keeping sales growth strong despite low-low incentives, the pressure is mounting on GM, Chrysler, Nissan and Honda. Will they continue to trade margins for volume, or will they take the opportunity to bump prices as Japanese parts shortages continue to play out?

For March, TrueCar has included a chart diagramming the ratio of incentive spending to average transaction price, giving us a look at two key metrics on a single chart. Short of a complete fleet sales or a retail market share breakout falling into our laps (crazier things have happened), this is one of the more important metrics you’ll want to look at to qualify the raw volume numbers coming out of March. But it’s not the only one…

Once again, for pure incentives numbers, we’ll have to look at two sources: TrueCar (above) and Edmunds True Cost Of Incentives. And once again, there’s a discrepancy. GM takes the top honors from Edmunds, for piling an average of $3,202 on the hood of each car, and earned some sass from Edmunds’ Director of Industry Analysis, Jessica Caldwell, who says

The hefty – and costly – incentives from GM in the first two months of the year fell back to Earth in March, and that translated to lackluster retail sales. The industry will be carefully watching GM’s performance this month to see if March was an aberration or the start of a downward trend.

TrueCar, on the other hand, gives top “honors” to Chrysler, which pipped GM by less than one hundred dollars. But the most interesting dynamic among the Detroit automakers is the short-term trend, with Chrysler and Ford’s incentives headed upwards and GM headed downwards. With the entire industry away from incentives compared to year-ago numbers, and pricing likely to be bolstered by Tsunami-related production interruptions, if there were ever a time for Detroit to bust its traditional overreliance on incentives, this might just be it.

As the former “car czar,” who led the government’s restructuring of GM and Chrysler, Steve Rattner has a considerable interest in portraying his pet projects as having turned the corner. But in a recent CNBC appearance, Rattner acknowledges that the market is “spooked” by GM’s increased reliance on incentives and the “unexpected” departure of its Chief Financial Officer. Ford, meanwhile, simply gets rapped for not communicating a slightly lower Q4 profit than Wall Street expected. And though Rattner’s not the guy to press the point home, there’s a clear distinction to be made between a much-hyped stock aligning itself with expectations (while making a tidy $6b+ profit) and a company that’s losing key personnel while leaning on incentives to recover the volume lost on brand and dealer cuts. But Rattner’s got bigger worries than short-term financial performances, or incentives or personell changes… he sees another, equally familiar problem that’s fixing to give GM (and, to a lesser extent, Ford) the fits: rising gas prices.

Though Rattner refuses to put his finger on a gas price “freak out” number, he does call oil prices the “overarching” problem confronting America’s two largest automakers (Rattner never even mentioned Chrysler), saying

Ford and GM, and especially GM, are not perfectly positioned if everyone moves back to small cars to deal with the price of oil… There isn’t a lot they can do…they can’t suddenly come out with a new car model to deal with the price of oil, so they have to play the hand they have.

And despite Bob Lutz’s argument that gas prices won’t have as extreme of an impact on consumers due to the lack of a 2008-style extreme spike, Rattner has a strong point here. According to the NYT, GM will have to pay around $1,219 per vehicle just to comply with the 2016 CAFE standard of 34.1 MPG, while major competitors like Toyota ($455 per vehicle), Honda ($574 per vehicle) and Hyundai ($745 per vehicle) will have to shell out considerably less.

Rattner’s acknowledgment of GM’s weak position vis-a-vis rising gas prices is troubling for at least two reasons. First, it makes the government far less likely to recover the bailout funds that Rattner has as good as promised taxpayers. Second, it underlines the cynicism of the bailout’s greenwashed veneer, pointing out that rescuing GM and Chrysler did nothing to make them “green car leaders.” As the NLPC’s Peter Flaherty points out

Of course, the Chevy Volt was supposed to be perfectly positioned when oil prices went up. Rattner didn’t even mention it.

Between “business as usual” sales-boosting policies, volatility amongst upper management and its unpreparedness for high gas prices, the argument that GM was truly transformed by the bailout is becoming tougher to make. Especially when the man responsible for the bailout’s restructuring acknowledges that the problems are serious and not going away any time soon. And with quadrennial labor negotiations with the UAW coming up, GM, Chrysler and Ford have a new problem on the horizon as well. It’s clearly far too early for America’s automakers to start resting on their laurels…

With automakers keeping the incentive pedal pinned to the floor as they entered the new year, a price war has been brewing in the US market for a while now. Hyundai USA CEO John Krafcik has called the trend “a step backward for the industry,” pointing out that nearly every automaker had struggled to regain pricing power coming out of nearly three years of industry-wide weakness. But with GM and Detroit leading the way with high (if “targeted”) incentives, matched by uncharacteristically high incentives from import-brand rivals like Honda and Toyota, it seemed that nothing could prevent a volume-pumping, but profit-sapping price war in the US. At least until Japan was hammered by earthquakes, tsunamis and nuclear accidents. Now, with manufacturers and suppliers still struggling to understand the full impact of production shutdowns and reduced inventories, TrueCar has projected current price trends forward, and finds that supply interruptions could reduce supply to the point where prices actually start coming up again. Check out TrueCar’s spreadsheet on supply and pricing projections in XLS format here, or hit the jump for a few highlights.

TrueCar’s VP for Industry Trends and Insights, Jesse Toprak, summarizes some of the most salient issues in the following bullet points

·      Almost all vehicles that have been affected by the loss in production will have an increase in transaction price. The vehicles that will have a more significant increase will be hybrids and the more fuel-efficient vehicles.

·      Japanese automakers will lower or eliminate all incentives for vehicles being affected by the earthquake/tsunami while increasing incentives on models where production isn’t being hardest hit

·      The rest of the industry will not be affected immediately from pricing and incentives.  The real impact will be felt when inventory starts to run out, some as soon as the end of March, but most towards end of April. If most of these vehicles affected have prolonged shortages, transaction price will increase as lower supply of consumer buying power due to relative improvements and continued easing in leasing standards

·      Models covered sold about 170,000 units in February, making up 17 percent of all sales

·      The biggest unknown currently are the potential shortage of parts model in Japan for vehicles made elsewhere.This could have major global impact on global output, at least temporarily.

How do these dynamics play out on a model-by-model basis? As the graph above shows, TrueCar projects that Prius will not only lose its discount by next month, but will have an $800 markup come the end of April. The Leaf is projected to have a similar markup, but you won’t see one of those sitting on a dealer lot with no buyer for (at least) most of this year. Otherwise, discounts are dropping by as little as 20-25% and as much as 60% for even non-hybrid vehicles. And if parts supply interruptions stop production outside of Japan, prices could go higher still.

The only question is how the American automakers respond: will they press home their advantage by keeping incentives high, or will they dial back and try to recapture some pricing power? We’ll be keeping a close eye on incentive levels to see how this shakes out. Look for the first indications when March sales come out.

Remember the phrase “jobless recovery”? Well, the auto industry is having something of a “price dropping recovery.” The headline for February auto sales may have been “the buyers are back,” but beneath the big volume boosts there’s trouble a-brewing. According to TrueCar’s transaction price forecast (above), Hyundai CEO John Krafcik was right to warn of an industry price war, as the industry has lost .3% of its average transaction price during the last year of recovery. Over the last year, Honda, Kia, Toyota and GM have all seen declines in average transaction prices, led by GM’s staggering two percent drop. And falling transaction prices are just the beginning: as we explore after the jump, incentives are also remaining high, and yet another volume-boosting technique is enjoying a boom as the industry once again starts to redline its sales.

Though both TrueCar (top) and Edmunds (bottom) show small declines in average incentive spending, the recovery in volume clearly isn’t having the desired (or expected) effect on incentive spending. And as with transaction prices, GM is the big loser on the incentives front, outspending the competition according to both reports, and recording one of the biggest year-over-year increases in incentive spending. But, argues TrueCar’s Jesse Toprak

The industry average for incentives is the lowest for February since 2007. The perception of a pricing war and overindulgence of using incentives is exaggerated. Automakers are now using incentive programs that are much more favorable. They are no longer spending as much upfront by offering customer and dealer cash and are instead pushing low APR and leasing programs.

But not everyone sees the combination of weak pricing, resilient incentives and high lease penetration as such a benign influence. Edmunds’ Jessica Caldwell argues

General Motors and Nissan are showing the biggest year-over-year boosts in incentives among the top six automakers. It isn’t any coincidence that Edmunds.com also reports that both companies saw their highest single-month lease penetrations in at least the last decade.

And in a WSJ piece, Caldwell singles out GM for a drubbing on this point

“For people who want to come in and buy a Buick or Cadillac, leasing is another alternative that sales people can guide them too,” Caldwell said. And while leasing has helped lift retail sales, it also poses a problem for the auto industry as many of those cars will be re-sold in a few years, flooding the market.

For example, 48% of the Chevrolet Malibu models sold by General Motors Co. (GM) were leased, a figure that is “way too high,” according to Caldwell. Caldwell said leasing made up 38% of Chevrolet Cruze models sold last month, and 69% for the Buick Regal.

GM also spent a lot on incentives this month, which helped lift sales. Caldwell told Dow Jones that when the auto maker’s first-quarter figures come out, “there will be a lot of questions on what they spent on incentives, because it’s going to be a lot.”

Now, a 48% lease mix may be “way too high,” but at least it’s an older vehicle. High numbers for the brand-new Cruze and Regal are far more worrying. And given that GM’s leases are so high, incentives are up (and at the highest levels in the industry), and transaction prices have fallen in the last year, it’s looking like the industry might be OK but GM is trying to buy volume however it can (to be fair, GM’s 21% fleet mix shows some discipline). And if a player as big as GM keeps trying to redline its sales, it’s only a matter of time before it drags the industry into a real price war. That’s good for consumers, but it’s bad news for an industry that’s still trying to recover pricing even as it recovers volume.

Sergio Marchionne  is a multitasker: He has been knighted in Italy in 2006, and is CEO of two carmakers, Fiat and Chrysler. Money-wise, he’s just getting by. A 300-page filing with the SEC revealed that his pay as CEO of Chrysler equals what he draws from his knighthood: Niente. Marchionne received no cash salary from the company. He didn’t work entirely for nothing though.

Marchionne “was given 361,446 shares for his services as a director from June 2009 to June 2012,” reports Reuters. In June 2009, that stock was worth $600,000. On December 31, 2010, the paper value of the shares had risen to nearly $2.9 million, Chrysler spokesman Gualberto Ranieri said.

The value of $7.95 a share is described by Ranieri as a “theoretical value.” Chrysler isn’t public yet, and nobody has paid any money for Chrysler stock.

Even back home, Marchionne took a haircut: Fiat paid Marchionne $4.8 million last year. That’s 27 percent below Sergio’s 2009 salary. Now we know why Sergio can’t afford a proper tie and has to run around in the same old sweater year round.

What’s the pay at other carmakers?  Ford and General Motors are expected to disclose their executive pay packages by the end of April.

Bloomberg seems to think GM is heading back towards bad habits, reporting

General Motors Co. is offering to waive the last three payments on existing leases if holders buy a new car, adding an incentive onto deals that last month exceeded offers made by rivals.

The promotion began this month and is valid on most models with leases that expire between now and Aug. 31, according to the company. GM raised incentive spending in January by 16 percent to an average of $3,663 per vehicle, the highest among major carmakers, according to researcher Autodata Corp. GM sales outpaced the industry that month.

GM said in a video presentation for its initial public offering in November that it intended to offer fewer incentives that crimped margins and created an impression that price was the main selling point for GM vehicles. Early-return leasing deals may conflict with the that pledge, said Jessica Caldwell, an analyst at Edmunds.com.

“I hope they’re not walking down that road,” said Caldwell….

Given GM’s decision to release less incentives data, the signs do seem to be piling up. But, says Chevy marketing VP Rick Scheidt

I am not seeing any internal behavior that suggests we have gone back to old ways. It’s still way too close to the bankruptcy for us to be sliding back into bad habits. We know everybody’s watching.

Another perspective on GM’s move towards subprime lease deals comes from Automotive News [sub]‘s Donna Harris, who writes

The credit crisis and recession expanded the subprime segment. Some of these “new” subprime customers walked away from their mortgages when their property values plunged. Under normal circumstances, they would pay their bills on time.

A lease can coax these people back into the new-vehicle market at affordable terms while helping GM move some metal.

Vehicles are typically leased at shorter terms than finance contracts — often three to four years, as opposed to five years or more for a car loan. So the customer will be back for a new vehicle quicker.

And the subprime lease can improve customer loyalty: Research has shown that customers are extremely loyal to businesses that help restore their credit. Lease renewal rates also are typically much higher than repurchase rates.

All of which makes a certain amount of sense… if risk is being managed well. Given the post-bailout concern over moral hazard, however, it’s hard to just sit back and trust that these leases aren’t simply re-inflating a subprime bubble that will necessarily pop again. Meanwhile, concerns about the larger market aside, GM is running yet another risk with its lease deal: it’s offering cheap terms on its latest vehicles (including Equinox, Cruze, and Traverse) potentially eroding gains in resale values, brand equity and average transaction prices.

It seems that Hyundai’s John Krafcik may well be right… it is beginning to look like GM is pushing the industry into a price war.

I think we can officially say that a price war broke out in the industry. There is apparently a lot of pressure to deliver sales results. I would call this a step backward for the industry. This is short-term thinking in a long-term process that hurts manufacturers and consumers.

Krafcik says GM kicked off the rush for increased volume by cutting prices in January, and that Toyota (which  has increased its incentives by 37.5% since last January, according to TrueCar) “quickly” responded by matching The General’s price cuts. Honda, Nissan and Chrysler have also kept their incentives high, and Chrysler has told Automotive News [sub] that it plans on increasing sales by 45% this year. Says Krafcik

We’ll see if others decide to follow. It’s certainly not in our plan right now.

Krafcik has a point: though sales have recovered over the last year as the economy has come back from the depths of recession, industry-wide incentive spending is up 1.3% in the last 12 months. Rather than taking advantage of the economic recovery to bring incentives down and transaction prices up, automakers appear to be focused entirely on volume. That’s certainly the message GM has sent by announcing that it would no longer release its incentive data. And, as Krafcik points out, the industry has already suffered mightily from such short-term, unsustainable thinking… but not everyone shares his concern.

GM’s response: sales incentives are “targeted.”

Rick Scheidt, vice president of GM’s Chevrolet, argued that Chevrolet has become more strategic, offering few incentives on hot-selling models such as the Equinox and Cruze and higher ones on its Silverado pickup to match competitors.

“If you don’t participate, you aren’t going to be a big player,” said Scheidt. “Things are much more targeted now. I don’t think you can read that much into just one month.”

That critique was echoed by Edmunds’ head analyst Jessica Caldwell, who tells Reuters

GM was very aggressive in January, but I wouldn’t call it a price war. Toyota’s incentives were not extremely different from what it had been doing. In February, other brands may be more aggressive as a reaction (to GM).

What’s left out in this analysis is that Toyota was long a counterweight to the Detroit automakers’ incentive binges, maintaining strong price discipline without losing volume. That changed this time last year when, under attack from all sides during its recall scandal, the Japanese automaker began to boost incentives… and it has yet to take its foot off the accelerator. Toyota maintains that it “isn’t leading the industry,” but by relaxing its incentive discipline, it’s helping accelerate an incentive war.

It’s easy to forget how much overcapacity clean-up the industry went through in the last few years, but it’s foolishness to think overcapacity can’t come back. If manufacturers start cranking up production volumes and use incentives to clear unsold inventory, the industry could pull itself back out of its recovery. We hear reports from the NADA convention about the level of ego involved in sales teams of several large manufacturers… by one account, “it’s getting personal.” As good as low prices might be for consumers, let’s hope that sales bosses take their eye off volume long enough to make sure the entire industry doesn’t cut its own throat trying to outsell the next guy. The last thing America’s auto brands need now is to starve themselves of profit.

As we wade through our year-end sales number reports, one of the important metrics that we’ll be looking at are incentive spending rates. Detroit continues to dominate both Edmunds’ True Cost of Incentives index (above) and TrueCar’s incentive forecast (after the jump), with little serious competition for their supremacy in this profit-sapping and brand equity-squandering category. Still, the foreign firms are increasing their incentives while Detroit has generally scaled back over the last year, so the incentive race is slowly getting tighter…

TrueCar’s incentive forecast (above) shows that Nissan in particular is approaching Detroit-like levels of cash on the hood, although discrepancies with the Edmunds numbers, particularly in regards to Nissan (the most-incentivized import) and Ford (the least-incentivized domestic), do muddy the picture a bit. And since only Emdunds offers year-end incentive numbers (below), that’s all we have to go on for a picture of the industry’s incentive activity in 2010. And those numbers definitely do show a narrowing of the gap between foreign and domestic automakers, with Detroit cutting back on incentives and the foreign firms increasing their spends. Still, until the Detroit firms breaks free of the $3k-per-vehicle level, it will be tough to heap too much praise on their restraint… and until the imports top $3k-per-vehicle, it won’t be much of a horse race.

Though the US auto market is up 11 percent this year, Honda’s sales are up only 3.6 percent compared to last year’s weak performance. That means the Motor Company isn’t even keeping up with the growth rates of such maligned brands as Lincoln (+7.4%), Chrysler (+16%) and Mazda (+9.8%). But Team Honda isn’t sweating the details. After all, the Civic and CR-V are nearing the end of their model cycles, while the Accord is a year and a half from its replacement. And, as Honda USA’s Executive VP John Mendel tells Automotive News [sub], at Honda

The debate over Detroit’s bailout was dominated by a narrative that portrayed the automakers as victims of Wall Street excess, and placed blame for their collapse on the frozen credit market. And though the credit crunch certainly hurt GM and Chrysler as well as their customers, Detroit was a victim of the credit crunch in the same way an addict is a victim of his dealer. By leveraging easy credit to fuel the SUV boom which covered for unprofitability in passenger cars (or didn’t, as the case may be), Detroit binged on zero-percent financing as the market road confidently to 16m annual sales. And then, finally, the music stopped and the Domestics crumpled, victims of their own greed, but with a convenient scapegoat in the hated Wall Street bankers. But if the bailout was intended to not only get GM and Chrysler back on their feet but also to prevent future collapses, there’s some troubling news in the offing: subprime auto lending is starting to roar back, and if it goes unchecked, it could reach pre-recession levels in short order…

The AP reports on the latest results from Experian’s survey of the credit market,which finds that

The percentage of loans going to subprime buyers rose 8 percent in the third quarter, their first year-over-year increase since 2007, according to a report issued Tuesday by Experian, a credit reporting agency. For new cars, the percentage of loans going to subprime buyers rose 13 percent over the July-September period in 2009. The increase for used cars was 3 percent.

The majority of loans — 63 percent — still going to buyers with prime credit scores, which is defined as a 680 or above. But even that is settling into a more normal pattern. Before the recession, when credit was very loose, just 51 percent of loans were going to prime buyers, according to Melinda Zabritski, director of automotive credit at Experian. Last fall, when credit was tight, 66 percent of loans went to prime buyers.

Another sign that the credit market is thawing: The loans people are getting are covering larger amounts and have longer terms. The average amount financed for new cars rose $2,530, to $25,273, over the third quarter of last year, while the average amount financed for used cars grew $977 to $16,706. The average terms rose by about a month, although the lowest tier buyers — those with scores of 550 or less — saw their terms rise by nearly four months.

Obviously more-available credit is a good thing for companies selling some of the most expensive consumer goods on the market, but an eight percent jump in subprime lending rates, an increase in debt loads and longer loan terms are hardly encouraging in a macroeconomic environment that calls for consumers to de-leverage after a decades-long credit binge. On the plus side, delinquencies have fallen, with 30-day delinquent loans down eight percent and 60-day delinquent loans down 17 percent. Still, thanks to the convenience of its Wall Street scapegoat, the auto industry hasn’t been forced to confront its credit addiction issues, and GM’s rapid purchase of subprime lender Americredit shows that its still eager to cash in on risky finance. The industry needs to watch subprime lending rates carefully or risk collapsing once more if the credit market runs into trouble again.

This, according to TrueCar.com, is what automakers spent on incentives last month. Though Chrysler and GM have cut compared to November of last year, their incentive spending is on the march compared to last month, and they still vie for industry “leadership” in these profit-sapping spiffs. But that’s just TrueCar’s perspective…

Edmunds paints a slightly different picture with its True Cost of Incentives index for last month. Both GM and Chrysler are showing the same long-term progress and short-term regression, but Ford’s number is significantly higher than TrueCar’s calculation. Edmunds also calculates a significantly lower industry average, making Detroit’s indulgence seem all the more excessive. So which outfit has the right numbers? It’s hard to say, as incentives are often regional and are in constant flux. One other metric, provided only by TrueCar does cast a little more light on the situation, however.

GM and Ford lead the industry, likely fueled by high-margin, high-volume truck sales, but over the last year, Honda and Toyota are seeing the worst transaction price erosions among the major US-market players. Chrysler’s transaction prices have roared back in the last year (though, in fairness, they had nowhere to go but up), but GM’s 12-month improvement still pales compared to Hyundai’s one-percent gain. But, if there’s just one automaker who looks likely to slide towards low-price volume slinging, it’s Toyota. Having introduced big incentives to combat recall-related PR problems, Toyota’s sales are basically flat year-to-date (and fell last month), and their transaction price is down a whopping two percent on the year. That’s not a great sign for any automaker.

The Auto Prophet brings up a point that completely escaped our discussion of General Electric’s EV mega-buy:

By gobbling up EVs, GE certainly helps to jump-start the industry, but they also gobble up future tax credits that consumers would have gotten, unless GE opts to forego the EV tax credit. Which would be bad business.

Yup, GE’s huge EV buy will be good for GE… but it won’t be so great for the 25,000 Americans whose tax credit will slurped up in the process. After all, the credit expires after a manufacturer sells 200k qualifying vehicles, so every credit GE uses brings GM and Nissan that much closer to the day they have to ask consumers to pay full price for their pricey EVs. No wonder GM is already pushing for an extension of the credit past 200k units.

Fleet sales data can be some of the toughest numbers to find, but thanks to a post from commenter GarbageMotorsCo, we’ve got some pretty comprehensive numbers for last year’s fleet performance [courtesy: automotive-fleet.com, PDF list here]. Overall fleet levels have been higher this year, but by identifying the most popular vehicles with fleet buyers (in terms of fleet sales as a percentage of overall sales), we’ll at least have some hints about this year’s performance. To help give a more accurate picture, we’ve left out obvious commercial vehicles (mainly large vans, and the queen of all fleet queens, the Ford Crown Vic (95% fleet)), as well as discontinued models like Chevy Uplander (57%) and Pontiac G6 (44.7%). We also left out hybrid or CNG versions of nameplates. Two vehicles with limited sales last year (GMC Terrain and Kia Forte) are on the list, even though they may not be on a similar list for 2010 (the Honda Insight is not on the list, despite selling all 193 of its 2009 sales to fleets). Hit the jump for our full list.

The Top 20 Fleet Queens of 2009, as a percentage of overall sales

Lincoln Town Car: 74%

Mercury Grand Marquis: 66.1%

Chevrolet Impala: 57.1%

Chevrolet Uplander: 57%

Chevrolet HHR: 54.8%

GMC Terrain (limited sales): 51.2%

Ford Taurus: 50.4%

Mitsubishi Galant: 50.1%

PT Cruiser: 48.3%

Kia Amanti: 46.5%

Volvo S60: 45%

Dodge Charger: 44.8%

Ford Explorer: 43.7%

Hyundai Accent: 43.6%

Dodge Caravan: 43.2%

Dodge Avenger: 40.8%

Kia Forte (limited sales) 40.3%

Chrysler Sebring: 39.8%

Kia Sedona: 39.3%

Kia Rio: 38.5%

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