August Brings Elevated Incentives, Higher Transaction Prices - But Not for Everyone

Steph Willems
by Steph Willems

A flurry of new model additions benefitted many automakers with additional sales and greater revenue last month, and none more so than Fiat Chrysler, which saw its average U.S. transaction price rise 6.2 percent, year over year. Can you guess which segments pulled in the most extra money per vehicle? Bet you can.

At the other end of the yardstick, two foreign automakers basking in the glow of a very healthy sales month saw their average transaction prices fall.

Kelley Blue Book estimates the average selling price of a new vehicle rose 2 percent ($723) across the board last month, with incentives as a percentage of MSRP coming in above 10 percent — a summertime hike occurring after eight months of incentive spending falling below 10 percent. ALG pegs the industry-wide incentive spend at 11.2 percent, up 1.2 percent from August 2018.

Thanks to new product like the Jeep Gladiator, FCA’s average transaction price rose to $40,823 (before consumer incentives), below that of its Detroit Three rivals but still a marked hike from this time last year. A greater volume of new-generation Ram 1500s and Jeep Wrangler JLs pouring out the door also attributed to the jump. Compared to FCA’s 6.2 percent, Ford and General Motors saw ATPs rise a much more modest 2.9 and 2.1 percent, respectively.

According to KBB, average full-size pickup prices rose 3 percent, year over year, with the midsize class — helped along by the recently added Ford Ranger — climbing 3.9 percent. The segment with the greatest ATP gain was premium midsize crossovers, at 4.2 percent.

Which automakers saw their ATPs drop, year over year? American Honda and Nissan North America, that’s who, and you can place the blame on a problem many automakers would like to have: generous sales. The combined sales of Honda and Acura vehicles rose 17.6 percent in August, with Nissan and Infiniti combining for a 13.2-percent increase — good news in a market generally expected to fall behind last year’s annual sales tally. However, the sales gain at Nissan was decidedly lopsided.

While Nissan-brand vehicles rose 16.2 percent, with the gain pretty much evenly split between cars and light trucks (16.1 percent and 16.3 percent, respectively), the value brand had to make up the difference lost by a faltering Infiniti division. Infiniti sales shrunk 14.9 percent last month, with the premium brand now down 12.7 percent since the start of the year. Looking closer, only one Infiniti vehicle — the QX60 midsize crossover — posted a year-over-year sales increase last month, which doesn’t bode well for the automaker’s coffers. The brand’s performance earned it a rock-bottom entry on ALG’s Retail Health Index among premium brands.

Nissan’s YTD sales, in comparison, fell behind 2018 figures by just over 5 percent.

With fewer luxury models rolling out of dealerships, Nissan’s tally, which included a large uptick in sales of the revamped Altima sedan, took up a larger share of the company’s overall volume. This explains the ATP drop. At Honda, a surprise 19.8-percent increase in honest-to-goodness passenger cars sales outpaced the increase in light truck sales. Acura saw car sales rise 24 percent, with light trucks falling 5.1 percent. Again, more cheaper cars being sold will tip the ATP scales.

Why so many cars being sold, you ask? Besides an extra selling day last month, incentivization leading up to the end of summer (and especially Labor Day) might have a lot to do with it, though ALG estimates Nissan’s incentive spend per unit actually dropped 4.9 percent compared to August 2018. It looks like the automaker is at least partly abiding by its promise to lean less on discounts to stimulate sales. The company just needs to weather the sales storm and slim down behind the scenes. Honda, on the other hand, saw its average incentive spend shoot up 15.8 percent, year over year — easily eclipsing FCA’s 9-percent increase and GM’s 8.8-percent hike.

The automaker least likely to spiff its sales last month was Kia, which recorded a 12.7-percent decrease in incentive spending. Ford also ranks high on the list of leaner automakers, with a 6.9-percent drop.

[Images: Fiat Chrysler Automobiles, Nissan, Honda]

Steph Willems
Steph Willems

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  • Inside Looking Out Inside Looking Out on Sep 05, 2019

    "Which automakers saw their ATPs drop, year over year? American Honda and Nissan North America, that’s who, and you can place the blame on a problem many automakers would like to have: generous sales. " More sales for less transaction prices means Honda and Nissan offered higher incentives or/and larger share of fleet sales.

    • Highdesertcat Highdesertcat on Sep 05, 2019

      If we're talking Average Transaction Prices, NBR had a segment on that this evening and buyers are paying more than ever these days, somewhere north of $37K, I believe. But great deals are still to be had out there. I expect a lot of people will commit to buying, or not buying, starting in January 2020 as fear and uncertainty grows over the upcoming elections in Nov 2020. Politics drives a lot of things in America, and it affects housing and new car sales disproportionately. But this is not the venue for discussing the potential effects of political outcomes. When it happens, it happens, and we'll all know it, just like we did over the previous decades. Cash for Clunkers anyone?

  • Jeff S Jeff S on Sep 06, 2019

    @highdesertcat--More of economic uncertainty caused by trade wars than the upcoming elections. Still too early to predict elections especially since the Democrats still need to narrow down their list of Presidential candidates. Farmers are being hit the worst by the trade war with China and we have yet to enter the all important holiday shopping season. As for auto and truck sales at some point there will be a noticeable downturn because they have been hot for so long that the level of sales is not sustainable. Also there is just so long a car loan can be extended to keep payments affordable especially when vehicle prices are steadily increasing. Some of the fear of economic downturn can be blamed on PODUS and some can be blamed on political uncertainty but much of the fear is that the economy has been good for so long that it cannot last--this is just part of the economic cycle.

    • Highdesertcat Highdesertcat on Sep 06, 2019

      Jeff S, we’re leaving on a trip this morning so I can’t continue this chat, though I appreciate your thoughts. I’ll drop in from time to time just to read and catch up but with bad internet access and only a tiny iPad keyboard, typing is too cumbersome. Later

  • Calrson Fan Jeff - Agree with what you said. I think currently an EV pick-up could work in a commercial/fleet application. As someone on this site stated, w/current tech. battery vehicles just do not scale well. EBFlex - No one wanted to hate the Cyber Truck more than me but I can't ignore all the new technology and innovative thinking that went into it. There is a lot I like about it. GM, Ford & Ram should incorporate some it's design cues into their ICE trucks.
  • Michael S6 Very confusing if the move is permanent or temporary.
  • Jrhurren Worked in Detroit 18 years, live 20 minutes away. Ren Cen is a gem, but a very terrible design inside. I’m surprised GM stuck it out as long as they did there.
  • Carson D I thought that this was going to be a comparison of BFGoodrich's different truck tires.
  • Tassos Jong-iL North Korea is saving pokemon cards and amibos to buy GM in 10 years, we hope.