March Incentives And Transaction Prices
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.
More by Edward Niedermeyer
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More, or less, incentive spending did not help my neighbor's son when he lost his job at the Chrysler dealer sales dept. Sales were just not there to keep him and two others employed. The problem is Chrysler itself, its name recognition or its name avoidance. If you can't move the iron, you discount it. Sometimes, even if you discount it, things still don't move as much as you want them to. Ford is doing extremely well in this area, not only in trucks but sedans and small SUVs as well. GM is a toss-up. Try as they might, the Silverado is just not selling except to GM fans. Ironically, the GM dealer here is also the Toyota dealer and that side of the house is going gang-busters. There already is a shortage of Prius in this area, and none are forthcoming for a while.The trouble with incentives, as I see it, is that as long as the dealers can set their own price, the MSRP is useless and the buyer can either take it or leave it when the dealers pad their sell-price. Many dealers have to pad their sell price, even with incentives, in order to break even if their sales volume is below what they need to survive. In that case, buyers will often drive the extra 100 miles to go to a volume dealership, like in El Paso or Albuquerque. One lady I know even went as far a Denver to get the exact Highlander she wanted at the Internet-price she wanted to pay. Point here is, incentives or not, most people will seek exactly what they want at the price they're willing to pay.
Incentives as a percentage of transaction price are the most relevant metric. Chrysler is on top of that ranking, but I was surprised to see Nissan at #2. GM is still high but cut back from the 11+% in February.
Love these charts. Yesterday I was wondering why Nissan had such a huge bump in March, today I see why.
Thank you for the % as a function of transaction price charts. Been dying for these.