November Sales: Unraveling The Incentives

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.