Luxury brands lead way in hiking spiffs to drive U.S. sales
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BMW AG, Volkswagen AG's Audi brand and Daimler AG's Mercedes-Benz unit were among a series of automakers doling out higher discounts to U.S. auto buyers in August, helping drive sales to the best month in eight years.
BMW, the biggest spender among the three luxury brands on a per-vehicle basis, boosted incentives by 45 percent from a year earlier, according to researcher Autodata Corp.
Promotional spending surged 30 percent at Mercedes and 71 percent at Audi, pacing an 18 percent jump for the total industry, the Woodcliff Lake, N.J.-based researcher said.
More aggressive incentive spending casts a shadow over an industry that is driving U.S. economic growth and entered the month having kept promotions in check.
In the first seven months of the year, the industrywide average discount per vehicle had risen 5.5 percent.
Bigger deals helped automakers report August sales that reached an annual pace of 17.5 million vehicles, the highest since January 2006.
"Between rising incentive spend, higher subprime lending, and longer loan terms, there is certainly cause for concern and reason to think the massive growth should eventually slow down," said Akshay Anand, an analyst at Kelley Blue Book.
Several full-line automakers joined luxury brands in boosting discount offers. Incentive spending climbed 43 percent at Nissan Motor Corp., 24 percent at Chrysler Group and 23 percent at Ford Motor Co., Autodata said.
The average cost of incentives per vehicle vary widely by brands, with sellers of higher-priced models such as luxury cars or fullsize pickups tending to spend more to boost deliveries.
Spending by vehicle averaged $4,912 at BMW last month, followed by $4,189 for Mercedes and $3,236 for Audi.
Chrysler was the biggest discounter among full-line carmakers last month, with average spending of $3,856 per vehicle, followed by $3,595 at Ford and $3,587 at General Motors.
"Incentive spending changes reflect consumer demand shifting to higher-MSRP, higher-profit vehicle segments, which is a net positive for most full-line automakers," said John Krafcik, president of auto-buying website TrueCar Inc.Contact Automotive News