Automakers boosted incentive spending by 12.5 percent in January in an effort to clear out old models, the auto information site Edmunds.com says.
The average incentive per U.S. vehicle was $2,714, $301 more than at the start of 2008, Edmunds says. Rising incentives and a collapsing auto market contributed to a sharply different sales pattern. Last month, 27 percent of vehicles sold in the United States were outgoing 2008 models; a year earlier, departing 2007 models accounted for 12 percent of new-vehicle sales.
Theres an 08 mess -- the number of vehicles, said Gus Whiteside, president of Tom Whiteside Auto Sales Inc.,a Chrysler-Dodge-Jeep dealership in Mount Sterling, Ohio. Of the 100 vehicles he had in stock at the end of January, 15 were 2008 models.
The industry started 2009 with a 94-day supply of light vehicles in the United States, more than 50 percent above the level considered normal.
Incentive spending actually fell in January from an average of $2,862 in December, Edmunds said.
The Detroit 3 decreased incentive spending from December by 7.3 percent to an average of $3,438 per vehicle. Those automakers each posted January sales drops of more than 40 percent, as total industry sales fell 37.1 percent.
Average incentives per vehicle rose for automakers from Europe, South Korea and Japan.
Chrysler incentives highest
Chrysler LLC averaged the highest incentives of the six biggest automakers, spending $3,616 per vehicle sold. Its sales dropped 54.8 percent in January, and its 151-day supply of vehicles on Feb. 1 also was the largest among the Detroit 3.
Chryslers incentive spending figure was lifted by the Employee Pricing Plus Plus program started last week. The promotion offers buyers of Dodge, Jeep and Chrysler vehicles the same price paid by Chrysler employees. It also includes rebates of as much as $6,000 and interest-free financing for 48 months.
Ive never seen anything like it right now, said dealer Jim Arrigo, referring to the promotion. Arrigo, who owns a Dodge-Chrysler-Jeep store in West Palm Beach, Fla., also is co-chairman of the Chrysler Dodge Jeep National Dealer Council.
Still, Chryslers January decline was steeper than any other major automakers.
Customer inquiries to Arrigos dealership tripled after Chrysler announced the program, he said. But record-low consumer confidence and the credit crunch are restricting the incentives effectiveness, he said.
We had 62 customers that came to this dealership last week that couldnt buy a car, Arrigo said. They understand that because of their credit score, theyre a little higher risk. But nobody will take that risk.
General Motors spent $3,322 per vehicle on incentives, followed by Ford Motor Co. at $3,055. Nissan North America topped the biggest Asian automakers, offering $2,129 per vehicle. Toyota Motor Sales spent $1,031, and American Hondas average was $988.
Ford continued its end-of-2008 employee pricing deal through January but said its retail sales rates that month matched Decembers depressed levels.
It did not appear to have much of an effect on showroom traffic, said Jesse Toprak, Edmunds.coms executive director of industry analysis. He said employee pricing deals lose steam as they are extended.
Edmunds.com includes interest rates, lease deals and rebates to dealers and consumers in its incentive measurement. The site has studied incentives for six years.