TTAC readers looking for a more pro-GM news source may want to check out Bloomberg for their next dose of pro-GM news. A story on Cadillac’s revived fortunes contains all kinds of enthusiastic copy and positive quotes, but still manages to bury the lede way down at the bottom of the story.

Take this quote for example

“Cadillac’s performance certainly exceeded expectations, and the ATS was the driving factor,” said Jeff Schuster, auto analyst with LMC Automotive in Troy, Michigan. “They have a lot happening with their lineup and the vehicles are hitting with consumers.”

Joel Ewanick himself couldn’t have come up with a better quote to feed to the industry price. The ATS is a nice car by all accounts. First drive impressions were positive, despite one of the buff books binning one into the red Georgia clay. But scroll a little further down past the ongoing textual fellatio and you’ll find the golden nugget.

Cadillac’s pricing problems show up in the incentives it offers. GM’s average incentive spending on the ATS in February was $3,700 per car, compared to $333 in September, when the new model went on sale, according to TrueCar Inc., a Santa Monica, California, researcher that tracks auto sales.

Uh oh. $3,700 just months after their crucial entry-level car was introduced? A nearly tenfold increase in incentive spending in just a few short months? Not good news at all. The incentives do explain why the ATS had a nice bump in sales right around February. It’s unfortunate that GM would have to spend so much per car to move a product as nice as the ATS.

Of course, Bloomberg handily explains away the unpleasant incentive information with this quote

Those discounts should decline as Cadillac’s redesigned models attract new buyers. GM said more than half the ATS buyers are coming from competitors such as BMW, Mercedes and Lexus. GM aims to increase sales of Cadillac in the U.S. by more than 30 percent this year, Bob Ferguson, global head of the brand, told reporters in New York last week. 

A look at incentive programs in the Miami/South Florida region (using ZIP Code 33180) as a sample shows that the ATS offering more aggressive incentive programs than its competitors. BMW is offering 3.1 percent APR financing for the new 3-Series (save for the Hybrid at 1.9 percent) versus 0 percent for the ATS. Audi offers no finance incentives for the A4 at all. While the ATS gets a $299/month lease for 36 months with $2,199 due at signing, a similarly equipped 328i would cost $349/month for 36 months with $3,824 due at signing. An A4 2.0T can be leased for $309/month for the same term with $3,719 due. Mercedes-Benz was not offering 36 month lease deals at the time of writing. Only Lexus came close to matching Cadillac’s offer, with a lease on an IS250 involving $309/month payment for 36 months, with $3,209 due at signing and a credit for the first month’s lease payment – on a model that is due to be replaced any day now, where dealers are desperate to get rid of the stock.

The incentive picture makes the Q1 2013 sales snapshot above even starker. The 3-Series and C-Class are way out in front. The C-Class is leading the segment with 22,912 units sold, with the 3-Series in second place with 20,662 units. Cadillac is in third place, but is beating the A4 by just 45 units as of the end of March (9795 units of the ATS sold versus 9750 A4s). The Lexus trails in fifth place with 5173.

The unfortunate thing here is that the ATS itself isn’t necessarily the reason for its lagging sales and heavy incentive spending. Rather it’s the result of the continued degradation of the Cadillac brand in the eyes of the consumer over the past few decades. I’m far from the only person that believes the ATS to be a superior product to the Mercedes-Benz C-Class, and there are plenty of knowledgeable  respected auto critics who feel that is is just as dynamically competent as the BMW 3-Series. But these two products are crushing the ATS in the sales race, undoubtedly on the strength of their respective brands. The unfortunate relaity is that most consumers don’t care about whether or not their car is The Ultimate Driving Machine; they just want a fancy badge to show off to other people. Until Cadillac’s brand is on par with the Roundel or the Three Pointed Star, this scenario of significant incentive spending and lagging sales will likely continue to play out, no matter how good the product is.

The General attracted all kinds of flak for its growing inventory of full size trucks. When we raised the issue earlier in the year, we were chided for yellow journalism and blatant bias. Months later, the MSM woke up to the story, and when the Detroit News wrote that GM’s pickup truck inventory was “much higher than the less-than-100-day supply considered ideal for full-size pickups,” even the diehards accepted that the inventory may be a mite rich.

That problem just went away. Poof, gone, just like that.

Were GM’s dealers sitting on a mountain of full size pickups in November, enough supply to last for 139 days, a month later that inventory of BOFs suddenly is as lean as Heidi Klum on hunger strike. The year ends with GM’s plus-sized truck inventory sporting an ideal HWP. If GM’s stats are to be believed, then dealers just ripped through two months of supply, reducing the inventory from 139 days to a measly 80. GM’s truck inventory is right on target. All is good.

Did those trucks just fly off the lots, powered by incentives, easy money, and a rebounding economy? Well, they did. And herein lies the problem. The 80 days of inventory assume that the torrid pace of December continues well into the new year.

Let’s visualize the matter. Total inventory of GM pick-ups was up a little in at the end of November, and down a little at the end of December. Nothing dramatic. The drama starts when it is projected how many days that inventory represents.

Mathematically challenged may see nothing wrong in this graph. Someone who internalized the rule of three could rebel. How come 221,649 units are good for 80 days in December if a month earlier 245,853 units represented 139 days?

Driven by generous discounts, and some year-end tax buying, GM pickup sales jumped from some 44,000 in November to over 72,000 in December. Should the December sales pace continue into the new year, then the 80 days would be correct. Should the sales pace fall back to November levels, then the full-size truck inventory would reflect 125 days.  Which is more like the good old General we know.

It did not take a high degree of intellect when we recommended last week to wait for a better deal if you are in the market for a Chevy or GMC pick-up.  GM threw its vaunted  fiscal discipline in the wind and is piling cash on the hood  of trucks that are piling up on dealer lots.

GM, says the Freep, is

“matching or beating discounts from rivals Ford and Chrysler, offering up to $9,000 off remaining 2012 models and close to $4,500 off 2013s. That, plus low interest rates, sweet lease deals and abundant financing, is good news for people in the market for a truck.”

We never put much credence in the story that truck armadas must be kept in reserve such as not to run out of them when GM switches over to its 2014 models.

At the end of November, Chevy dealers had more than 169,000 Silverados nationwide,138 days of supply. Ford had a 90-day supply of F-150s, and Chrysler had 106 days’ worth of Rams.

:

The company that swore discipline and to protect profits now offers incentives as high as

$5,000 per pickup, Bloomberg reports.

This is probably just the opening volley in an all-out incentive war.

There are rebates worth $8,200 for Dodge Rams. TrueCar figures that Ford lubricates its pick-up deal with $6,500 on average. Nissan advertises rebates worth $7,450 for its Titan pickup.

Last Friday, GM doubled cash incentives and sweetening lease terms on some vehicles, including Chevrolet Silverado and GMC Sierra pickup trucks.

By end of November, GM was looking at pickup inventories of 245,853 units. That’s 4½ months of sales of Chevrolet Silverados and nearly five months of sales of its GMC Sierra.

Are you in the market for a full-size pickup? Hold your fire. With a little patience, you can profiteer from an all-out Battle of the BOFs. It’s a fight for your money, and for delivering optimistic 2012 sales goals. The noise you hear outside are the winds of war:  GM not only missed its truck sales goals in November, it also sits atop a 4 ½ month supply of full-size pickups taking up space (and cash) at dealer lots.  ”We’ll continue to use all levers to influence inventory…,” said Kurt McNeil, GM’s VP of U.S. sales. “That includes first and foremost adjusting production and marketing activity.” Translation: Shutdowns and cash on the hood.

GM’s pickup truck inventory is “much higher than the less-than-100-day supply considered ideal for full-size pickups,” says the Detroit News, a publication untainted by suspicion of anti-GM bias. We have been saying this for months, but who’s listening to us? Well, nadude does. Even the DetN is growing dubious of the canard that the trucks are piled high to compensate for downtime at plants that transition to new 2014 Chevy Silverados and GMC Sierras. The DetN thinks that GM will have to offer bigger incentives to move the metal, and that the lieutenants at the General are “looking at possible production cuts.”

The first skirmishes were fought in November. After an artillery barrage of what GM called “unexpectedly high” incentives on 2012 pickups by Chrysler and Ford, Ram pickup sales exploded by 23 percent last month, Ford’s F-series wooshed 17.9 percent higher. GM did not return fire. Result: GM’s total truck sales lost 11 percent, full-size truck sales were down 8 percent.

“I imagine GM will be very aggressive spenders in December to end the year on a high note,” said Jessica  Caldwell of Edmunds.

Agreed. And since the other guys are no dummies, TTAC expects a happy exchange of counter-battery fire. Not of the electric kind.

Sales won’t be the only thing up when September new car sales are reported today. (Keep an eye on TTAC.) “”Transaction prices in September are the highest in years,” said Jesse Toprak, research chief of TrueCar.com.  

Transaction prices are going up because incentives are going down. On average, manufacturers put $2,468 on the hood of each car, down 6.7 percent from the $2,645 offered in September 2011. Most generous: Chrysler Group ($3,256) and GM ($3,008). Stingiest: Hyundai ($1,294) and Toyota ($1,930).

If you want deals, look for 2012 model year vehicles. Says Jessica Caldwell of Edmunds:

“This is the time of the year when inventories really start to see dramatic shifts in the proportion of vehicles from the upcoming model year. As demand builds for the new hot designs, car dealers don’t have to offer as much of a discount to move those vehicles off their lots. That’s why we recommend that car shoppers give extra consideration to some of the great deals on outgoing 2012 model year vehicles.”

The latest from USA Today suggests now is a good time to buy a Chevy Volt, if that’s what you really want.  I checked in with former(?) TTAC scribe Captain Mike Solo, currently helping someone lease a Volt, and he says about the same: lease for $270 a month, with $1500 down.  Which includes the government tax credit built into the residual…probably. So what does this all mean?

So far this year, the Volt’s outsold half the cars currently on sale.  And while a $40,000 Chevy (that isn’t a Vette or a truck) is a hard sell, cash on the hood gets everyone hot and bothered. Especially truck buyers, regularly seeing discounts of $10,000 or more. Sales rise, then fall.  A dealership’s floorplan falls, then rises once again.  Automakers calm down, then heat things up. And now we know that it’s no different with the Volt. Surprised?

Unless you have Ferrari’s rabid customer loyalty, this is just the game in action. No matter the Volt’s cutting edge technology, no matter what was sold to us in Washington by people no longer in play, it all comes down to the Money, Honey.  And this incentive cycle is just business as usual, so you can decide if the Volt is a success…or a flop.

Off to you, Best and Brightest.

People keep their eyes on automaker incentives for various reasons. Customers are hunting deals. Analysts hunt carmakers that are sitting on a glut of cars. Incentive numbers don’t always tell the full story, says Edmunds. In August, incentive spend was subdued and stable. Automakers and dealers have become adept in camouflage though, and the reported stability of incentive spending doesn’t factor in some of the “hidden incentives.”

Says Edmunds Vice Chairman Jeremy Anwyl:

“Automakers and dealers have been very creative this summer with how they’re packaging their deals and boosting sales numbers, whether through controversial stair-step incentive programs or by working with lenders to expand credit. Many of these programs are essentially impossible to quantify, but their cost to the manufacturers is real.”

BMW made headlines it did not want to make with a special offer to dealers on the last day of July. The Wall Street Journal reported that dealers received discounts of as much as $7,000 per 2012-model car, as long as each vehicle was reported as sold on that day only. The cars could then be offered to retail buyers at strong discounts with dealers still turning a good profit.

February’s incentives came in at the lowest of any February since 2003, says the Edmunds.com’s True Cost of Incentives barometer.  Edmunds.com reports that the average TCI per vehicle in February was $2,193, up 2.4 percent over January (MoM,) but down 14.5 percent from February of last year (YoY.) Says Edmunds.com Senior Analyst Jessica Caldwell:

“The decreased incentives spending across the industry so far in 2012 really underscores the healthy performance we’ve been seeing at dealerships nationwide. Car manufacturers know that consumers who deferred purchases in 2011 are still coming back to the market and by stepping back the discounts, they stand to pocket bigger profits. The first quarter of 2012 is shaping up quite well for automakers.”

Given the interruptions endured by their Japanese arch-rivals, Ford and Chevy  were nearly guaranteed to win the brand volume sweepstakes. But look closer and all is not entirely well at the top of this heap. Ford, the volume leader, grew its overall sales by just 11% last year, in a market that grew 10.3%… in short, Ford didn’t lose any market share, but it didn’t win much either. More troubling for the brand’s long-term prospects, much of that growth came from trucks (up 15.1%), while car volume improved only 3.7%. In short, despite launching a brand-new Focus (which had a disappointing 2011), Ford lost ground in the car game (which grew more slowly than trucks, but nearly matched them for volume). The news was better at GM, where overall sales rose 13.2% on 17.8% car growth and 10.6% truck growth. Still, given the weakness at Honda and Toyota, one would have expected more from a GM that is still rebuilding from its bailout-era downturn.

Toyota and Honda posted similar results, having lost 6.7% and 6.8% volume drops respectively. But Nissan, which recovered far faster from the tsunami and was hit less hard by the Thai flooding, made up for some of their losses, putting a  14.7% volume increase in the Japanese side of the ledger. All three Japanese brands lost volume on their luxury brands, however, bowing before the German onslaught. And though Toyota’s losses were evenly-distributed by vehicle type, both Honda and Nissan relied on truck sales (including non-BOF CUVs) to boost volume. More importantly, the qualitative weaknesses of newly-launched products from Honda and Toyota helped fuel a sense of Japanese downturn that could prove to outlast any impacts of 2011′s natural disasters… but only time will tell.

With Detroit’s offerings enjoying the benefit of comparisons to their ignominious predecessors and new Japanese products enduring the exact opposite, Detroit’s market share growth continues to be mysteriously stalled. Chrysler’s turnaround continues apace, with 26.2% corporate volume growth, but with truck volume dropping in an otherwise strong market for the segment, profits will not grow commensurately. And a 66% increase in car sales growth looks a lot less impressive when you realize that its car sales were a mere 354,359 units… which is fewer than VW/Audi sold in the same period.

So, what happened? Think of the current Republican presidential nomination process as a parallel: Instead of the long-running pitched war between Detroit’s “Big Two” and Japan’s “Big Two”, the market is fragmenting, creating a thick pack of contenders rather than clear winners and losers. Hyundai/Kia enjoyed 26.5% combined growth on record volume. Nissan began to emerge as a rising power after decades of playing catch-up to Honda and Toyota. Volkswagen began its new value-oriented volume blitz, growing VW-branded car volume 29.4%. 44% growth at Jeep propelled Chrysler up and away from unsustainable volumes. Even Mitsu and Volvo posted some of the biggest volume percentage gains, up 41.9% and 24.6% respectively. The days of Toyota-Honda-GM-Ford dominance seem to be coming to an end, forcing brutal battles for every tiny sliver of growth.

Things have not changed dramatically in the truck world over the last year. Though truck volume outstripped car volume by nearly 400k units and though truck sales growth outstripped car sales growth, those gains largely came on the back of non-BOF CUVs. My analysis on the truck front has changed little since I wrote about The Great American Downsizing, and the new CAFE regulations that came out this year show that the days of BOF truck/SUV dependence for any manufacturer are coming to an end. On the car front, the action has been in the compact/midsized arena, the former of which is unsurprisingly exhibiting the wealth of solid options and killer competition that is beginning to define this industry. As 2012 unfolds, I’ll continue to look at the compact segment as a bellwether for the strength of brands. And with new versions of the Camry and Passat out, new Malibu and Fusion models coming, and an Altima replacement likely waiting in the wings, look for the midsized segment to continue to heat up as well. Meanwhile, with the luxury sedan segment essentially treading water, nearly all of the Japanese and American brands will need to dig deep to fend off the German takeover of the market.

The best news coming out of 2011 was that North American-sourced vehicles continued their strong turnaround. Fueled by Japan’s Yen crisis, the weak dollar and overseas natural disasters, insourcing of US sales picked up pace after a decade of precipitous declines. And given the larger trends in the industry, this dynamic should continue as production flees Japan… at least until Chinese imports gain acceptance in the marketplace. Given that this trend is being driven by foreign brand insourcing rather than a resurgence of sales from Detroit, it seems clear that the prospects for US auto industry employment have improved independently of the bailout. Though GM and Chrysler would not have survived this long without government intervention, and though they seem to have stabilized, there’s little to indicate that either GM or Chrysler is en route to juggernaut status in the US market (and GM could well take a PR and sales hit if the government exits its “investment” with a taxpayer loss).

Of course there is much more to analyzing 2011′s sales results than volume alone… from pricing to incentives, from fleet sales to inventory, there are a million qualifiers to the volume numbers that I simply don’t have the data to analyze effectively. Luckily TrueCar, which looks at as much data as anyone, has released a grade sheet for the industry by manufacturer and by brand. And the results there seem to reinforce my perception of 2011: an inevitable loss by the Japanese, and not much momentum gained by Detroit. In short, 2011 appears to have been the year of the insurgent brand (with the notable exception of Subaru, which saw its share peak in 2009-10 and is now falling off), and the opening of a new, more competitive chapter in the US market. This bodes well for consumers, who can anticipate better vehicles over the next product cycle or two, but it also foreshadows another shakeout further down the road. And this time it seems just as likely that Honda or Toyota could find themselves knocked out of the top tier as Ford or GM. In short, there’s never been a more exciting time to be watching the US auto market.

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.

On their Q2 earnings call, GM gave this presentation [PDF] and made the following claims:

“On Slide 12, we provide what we view as key performance indicators for GM North America. The 2 lines on the top of the slide represents GM’s U.S. total and retail share. The bars on the slide represent GM’s average U.S. retail incentives on a per unit basis. Now U.S. retail incentives as a percentage of average transaction price and compared to the industry average is noted at the bottom of the slide.

“For the second quarter of 2011, our U.S. retail share was 17.6%, up 1.3 percentage points versus the prior year and down 0.6 percentage points versus the prior quarter due to the absence of the first quarter sales programs. Our incentive levels on an absolute basis have declined significantly from the prior year as well as sequentially. On a percentage of ATP basis, our incentives were 8.9%, down 2 percentage points versus the prior year. This puts us at approximately 103% of industry average levels for the second quarter of 2011, flat versus the prior year.

“In terms of incentive levels, our plan continues for us to be at approximately the industry average for the year on a percentage of ATP basis. These results for share and incentive demonstrate the impact of our plan to produce great vehicles the customers are willing to pay for.”

I did not try to verify the first part of the highlighted claim (that incentives have declined compared to previous year totals), but the second part of the claim (that incentives have declined sequentially) is demonstrably false.

GM also claimed

Price was favorable $600 million due to the vehicle price increases and the reduction of sales incentives in the second quarter. On average, our retail incentives were approximately $800 per unit lower in the second quarter.

This claim is true. GM also claimed

And right now, we’re looking at kind of flat incentive spending H2 versus H1, primarily because of the uncertainty around what the Japanese might do once their stock levels up back up to reasonable levels and then what the competition might do relative to following or not.

This claim is demonstrably false. Finally, when probed about their incentive spending, GM’s Daniel Ammann said

Well, what I’ve said, we’re saying approximately, right? And part of the reason we’re saying approximately is it’s not exactly clear, to the earlier discussion, how things are going to unfold with the Japanese with the supply/demand equation. The key message is that for all of last year, for the second quarter of this year, we were clearly at or around, I think last year, we were slightly below. This year — well, this quarter, we’re right on. That’s the way that we’re conducting the business. That’s the way that we’re going to run it going forward. Exactly where the year comes out, given the Q1 and sort of unknowns that could happen this year, we think it’ll be approximately around the industry average, but we can’t be that precise at this point.

It seems like he’s almost walking back the claims made in the presentation, so I looked at the way GM presented the data versus the way Edmunds presents its data. GM’s incentive figures demonstrate spending as a percentage of average transaction price (ATP). So, their chart on page 12 of the presentation looks at a level of spending compared to an average price of all vehicles sold in the fleet in a given month or quarter, and displays it as a percentage. That much may be true, and they may be on par with the rest of the industry when they present the data like that. The GM%/Ind. % bar at the bottom of their chart reflects this, as they want that number to be as close to 1.00 as possible.

However, Edmunds looks at average amount of incentive spending per vehicle sold, and the story now becomes quite different. Using data from Edmunds press releases on average incentive expenditures per unit sold, here are a couple of charts of interest:

So it appears at first glance that GM cooked its books ahead of the earnings call. They are clearly spending far more on incentives per vehicle sold than any other auto manufacturer, and definitely far above the industry average. Their incentive spending has also not been in sequential decline — if anything, it has fluctuated, and seems to be on a rising trend at present, which is consistent with industry trends. No doubt the debt ceiling debate, crashing Dow, S&P downgrade, and any other number of factors could have compelled the auto industry to stoke demand with extra incentives. GM is also not spending on a flat level between Q1 and Q2.

Which leads us to this question: what happened in January 2011 and May 2011? I seem to recall something about potential UST sales of taxpayer shares at the first of the year and in May. I’m not ultra-conversant in stock market speak, but I wonder if this explains the May incentives leap at GM:

The Treasury, which owns 33 percent of GM, can file as soon as May 22 for a secondary offering. Such a process requires a lengthy review by the Securities and Exchange Commission, so the department will wait until it can use an S-3 filing as soon as July 1 that allows for shares to be sold more quickly, said the people, who asked not to be identified revealing private plans.

My guess is that if GM knew UST was about to sell its shares, finally divesting it of the “Government Motors” moniker, they could have boosted incentive spending in January and May to pad volumes so stock prices would rise, and help the government make the taxpayer as close to “whole” as it possibly could.

Part of this argument comes down to a simple question of how best to measure incentive levels: by unit or by average transaction price. Our tipster argues that Edmunds’ volume-based metric is more credible, but because incentives only matter to the extent that they reduce revenue and profits, measuring them as a percentage of average transaction price is actually the more relevant metric. But don’t write off the tipster’s warning just yet, as he’s right about one thing: according to both metrics, there are signs that GM’s recent progress on pricing and incentive discipline may be hitting the skids.

If you prefer to look at incentives as a percentage of ATP, TrueCar’s August report shows GM’s incentive percentage rising .1%, from 9.5% to 9.6%. And according to the same report, GM’s 9.6% average was .6% higher than the industry average. On a non-ATP-adjusted basis, Edmunds’ data shows GM’s transaction price average fell .8% from July to August, while its incentives per vehicle rose .5%… and only Daimler and BMW had higher average incentives among manufacturers.  Going into September, both Edmunds and TrueCar show GM and its Chevrolet brand as struggling with pricing discipline, as GM vehicles, particularly 2011 model-year Chevies, show up as the most-incentivized vehicles in a number of segments. According to Edmunds, Chevy was the second-most incentivized brand (after Lincoln) on a non-ATP-adjusted basis. In short, our concerned tipster may be on to the early signs of weakness in GM’s pricing power, especially given the context of undersupply at key competitors, but we’re still a long ways from the kind of scenario that anyone is going to lose sleep over. If anything, the scariest part of the story is that GM’s average transaction prices are coming back down after making strong post-bailout gains.

But our tipster is at least as concerned with hypocrisy as the possibility that GM will start bleeding cash again, and here is where his case firms up. After all, the mixed picture can be sliced and diced, but GM’s leadership has been dishing out tough talk on the incentive/pricing issue that simply isn’t being backed up with firm numbers. In fact, in different markets, GM is indisputably “buying market share,” contrary to the public statements of its CEO.

Compare/contrast this quote from GM CEO Dan Akerson, in a recent American Public Media interview:

RYSSDAL: You know, I had a conversation with Alan Mulally on this program about two, three years ago before everything went south, and I asked him about market share versus profitability, and he said, “Oh yeah, I’ll sacrifice market share for profitability any day.” Seems that you have an opposite viewpoint? You want market share and profitability.

AKERSON: Our first priority is profitability. We’d like to get market share because we’re not going to price incent, discount if you will, to buy market share. In fact, our incentives are down year over year and are consistently below our domestic competitors, quite frankly. That speaks about brand; it speaks about the quality of our product and the market reception of our products. But of course, if you’re producing great products and it’s what the market wants and are willing to pay for it and you gain market share, that’s a nice secondary consideration, because I agree with Alan, you should price for profitability or else this could be a corrosive business environment otherwise.

With this story on Bloomberg:

General Motors Co. (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.

Propping up minivan sales through sticker-price reductions is crucial for helping Detroit-based GM remain the top overseas automaker in China, ahead of Volkswagen AG, after the government ended stimulus programs and local authorities restricted purchases to curb highway congestion.

“GM does not rely on the minibus for profit,” said Jenny Gu, a Shanghai-based analyst with industry researcher J.D. Power & Associates.“They only contribute volume.”

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.

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.

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.

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 any sales-watcher knows, volume isn’t everything. Fleet-retail mixes, incentive spending and transaction prices are all important considerations for putting volume numbers into context. As usual, we’ve assembled Edmunds’ True Cost Of Incentives index as well as TrueCar’s Transaction Pricing and Incentive Spending forecasts, for a complete picture of these important metrics… and after the jump, we’ve added a few notes on the discrepancies between the two firms’ numbers.

There are a few inevitable discrepancies between the Edmunds and TrueCar incentive spends, which we have learned are due to TrueCar’s inclusion of volume-based spiffs and differences in lease-subsidy calculation. Which number is closest to the truth? Well, much of TrueCar’s team used to do forecasting at Edmunds, and though non-disclosure agreements prevent them from explaining in detail how their secret sauce is better, it makes sense that they’d be trying to offer more than their previous employer (and they claim their data is based on more transactions than any other forecasting firm). Meanwhile, Edmunds’ forecasters say they’re “not comfortable” including tough-to-calculate volume-based spiffs. In short, either number could be off a little… but if I had to put money on it, I’d lean towards TrueCar’s numbers.

So, did GM rule incentive spending last month, or did Chrysler? Edmunds calculates that GM spent $3,762 per vehicle, but TrueCar sees The General at a much lower $3,089 average. Edmunds put Chrysler at second place with $3,386 per vehicle, while TrueCar puts ChryCo first with $3,557. Whether this discrepancies are accounted for by lease calculations or volume-based dealer spiffs isn’t at all clear, but TrueCar’s first-place ranking for Chrysler does seem to indicate that one of these factors is pushing up Chrysler’s incentive average. Similarly, the nearly-$500 difference between Honda’s two January 2011 incentive spend forecasts indicates that Honda may be dipping into the volume-based incentives that TrueCar tracks. Either way, it’s clear that incentives are headed down across the board in the short-term (although Honda and Toyota are still up huge in terms of year-over-year gains).

In the short-term, transaction prices seem to be rising slowly from their December levels, although the industry-wide average is still half a percent off its January 2010 mark. In the short-term, only GM appears to be losing ground on transaction pricing (which, taken with incentive levels, give some cause for worry), although over the last year, Honda and Toyota are clearly the biggest losers when it comes to transaction price. Part of that may be tied to falling consumer perceptions, but there’s another, somewhat perverse dynamic at play. TrueCar’s Jesse Toprak explains

Transaction prices dropped slightly in January as consumers purchased a relatively higher percentage of small cars and compact SUVs. If gas prices continue to rise, transaction prices could continue to decline, as consumers tend to shift purchases to smaller, more fuel-efficient vehicles

And because the Detroit automakers gain the greatest transaction-price benefits from strong truck and SUV sales, their transaction price levels could well be the first to suffer from a prolonged rise in fuel prices.