Two industry titans are flexing their marketing muscles, and some analysts fear the year-long truce in the industry's costly incentive war may be coming to an end. Across the industry, incentives fell in January from December. But General Motors boosted January spiffs to an average of $3,762 per vehicle -- up 16 percent from December and 29 percent from a year earlier, said Edmunds.com.
J.P. Morgan analyst Himanshu Patel says that accounted for GM's 0.9-percentage-point gain in market share compared with January 2010, to 21.8 percent. And Barclays Capital analyst Brian Johnson said GM's move could be "a dangerous first salvo in a heretofore quiet pricing front" that risks a broader price war.
The second salvo has been fired: Toyota last week announced aggressive new incentives that began Feb. 1.
The spiffs are similar to those offered in last year's Toyotathon campaign. For example, Toyota will offer 0 percent financing for 60 months, plus $500 cash back, on the Camry. Loyal Camry owners financing through Toyota Financial Services will receive an additional $500 cash, said Toyota Division boss Bob Carter.
Toyota Motor Sales U.S.A. was the only major automaker to lose volume in 2010. And TrueCar analyst Jesse Toprak noted that last month Toyota failed to gain share compared with January 2010, when it halted sales of eight models linked to unintended acceleration.
"Toyota is failing to take advantage of the recovery," Toprak said.
So is this the start of something big?
"It's not a price war yet, but it's not a good sign," said forecaster George Magliano of IHS Automotive. "Both GM and Toyota are feeling a need to boost market share."