Sales Incentives Soar, "Value Pricing" RIP

sales incentives soar value pricing rip

Back in August '06, GM announced "Value Pricing" policy. Yes, well, reports that cash back and special financing offers are back, and they're big. "Incentives have been boosted to the levels we saw regularly before automakers instituted the 'value-pricing' strategy that aimed to reduce sticker prices and minimize the need for incentives." The Dallas Morning News has the list, and it ain't pretty for profits. While you'd expect the arthritic Mercury Marquis ($6500) and lame duck Dodge Ram ($5k) to offer incentives, the Explorer's $4k, Focus' $2k and 300C's $2k has got to hurt. Even the highly-touted Cadillac CTS (1.9 to 4.9 percent) and Malibu (5.9 to 7.9) are using financing to help move the metal. The transplants are playing the game as well; the struggling Nissan Titan comes with a $5k come-on and the new Toyota Tundra slaps up to $3.5k on the hood, or zero to 3.9 percent financing (which Box forgot to mention). Overall, the numbers tell a familiar tale. "In its most recent assessment, found that the average incentive in February for the Detroit Three was $3,393 per vehicle, while European brands spent an average of $1,945 per vehicle sold, Japanese brands averaged $1,313 per vehicle sold and Korean brands spent $1,807."

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4 of 24 comments
  • Yankinwaoz Yankinwaoz on Mar 24, 2008

    Hmmm.... I've never understood cash rebates for cars. I've seen them advertised ("Buy today and get $1000!"). So they are giving you your own money and charging you interest. Why don't they just reduce the price by the rebate? I guess there are people out there who are dumb enough to borrow their own money. Weird.

  • Gottleib Gottleib on Mar 24, 2008

    The unfortunate truth of the matter is that incentives are used to sell everything from groceries (MVP discount cards), airline tickets(frequent flyer miles) and yes automobiles (rebates and financing incentives). When was the last time you made a purchase and weren't being offered some type of maintenance agreement and or extra warranty coverage for a small fee? It appears business can't make sustainable profits without resorting to these psychological mind games in order to move product.

  • Juniper Juniper on Mar 24, 2008

    I see the Dallas Morning News skipped Toyota and the $4000 on the hood of new Tundras. I wonder why? Is your source reliable?

  • Robert Farago Robert Farago on Mar 24, 2008
    Juniper: I see the Dallas Morning News skipped Toyota and the $4000 on the hood of new Tundras. I wonder why? Is your source reliable? Terry Box (of the Dallas Morning News) is a sharp cookie. But you're right to point out that he didn't point out Tundra incentives. Which are... 0-$3.5k on 08 models 0-$5k on 07 models or 0% on 07s 0-3.9% on 08s I'll add some of this info to the blog post. Thanks.