Edmunds.com: Toyota’s Generous Incentives Ignite Online Interest
SANTA MONICA, Calif. — Edmunds.com believes Toyota's announcements of zero-percent financing and special lease deals are being very well received because of a sharp rise in purchase intent by site visitors.
Officials indicated that the incentive offerings generated nearly a 40-percent spike in purchase interest when measured over a 48-hour period.
Comparing recent history, the increase is significant. In January, Edmunds.com said Toyota's purchase intent averaged a little more than 13 percent and then fell to as low as 9.7 percent because of recall announcements.
On Monday, site officials found that Toyota purchase intent had recovered to 13 percent. On Tuesday when the incentives program was revealed, they spotted that Toyota purchase intent soared to 18 percent — a 14-month high on Edmunds.com.
Apparently, slightly later announcements of zero-percent financing by Chrysler and General Motors didn't have the same effect, according to executives.
In fact, Edmunds.com indicated that Chrysler purchase intent decreased from 3.3 percent to 2.9 percent, and GM purchase intent rose just slightly from 12.6 percent to 12.7 percent.
"Because of the Toyota recall, people have been closely watching the company's moves, and many were ready to take action upon hearing the announcement of this highly anticipated incentives program," explained Edmunds.com senior analyst David Tompkins.
"Chrysler and GM didn't get quite as much attention for two main reasons: historically — such as in the Keep America Rolling campaign in 2001 — followers never get the same level of attention that the initiators do, and, second, this type of announcement is far more rare for Toyota," Tompkins continued.
George Kang, another senior analyst at Edmunds.com, also offered his perspective on the attention the Toyota incentives sparked.
"The Toyota recall saga allowed other automakers to snag some market share, and now Toyota wants it back," Kang interjected.
"Despite their ongoing challenges, the company still has plenty of brand strength and consumer confidence," Kang added.
Edmunds.com pointed out that purchase intent measures actual buyer interest reflected by pricing research, vehicle configuration and other focused steps. Officials maintain that purchase intent has a strong correlation to sales.
They went on to note that automaker purchase intent reflects share of total Edmunds.com traffic engaged in purchase intent activity, while model-level data reflects share of Edmunds.com traffic engaged in purchase intent activity within the indicated model's segment.
|Recent Purchase Intent Changes at Edmunds.com|
|Brand|| Purchase Intent
| Purchase Intent
| Purchase Intent
| Chrysler (including Chrysler,
Dodge, Jeep and Ram)
|General Motors||12.6||12.7||+ 0.8|
| Toyota (not including
Lexus and Scion)
|Vehicle|| Purchase Intent
| Purchase Intent
| Purchase Intent
|Buick Enclave||16.1||17.6||+ 9.3|
|Cadillac CTS||3.2||3.3||+ 3.1|
|Chevrolet Malibu||5.5||5.3||– 3.6|
|Chrysler Town and Country||4.2||4.4||+ 4.8|
|Dodge Ram 1500||7.7||6.5||– 15.6|
|Jeep Wrangler||17.9||15.3||– 14.5|
|Toyota Camry||8.9||13.0||+ 46.1|
|Toyota Corolla||6.3||9.0||+ 42.9|
|Toyota RAV4||11.5||17.9||+ 55.7|
February Incentives Aim to Lure Away Toyota Customers
Edmunds.com analysts reasoned that jumps in incentives offered by automakers in February often were associated with attempts to secure more buyers who might be shying away from Toyota.
The site estimated that the average incentive was $2,588 per vehicle sold in February. The figure represented a $248 increase, or 10.6 percent from the previous month.
However last month's figure was off from year-ago incentive totals. The February 2009 figure was $422 or 14 percent higher.
"Incentive spending went up last month for most major automakers as they tried to lure Toyota buyers to their brand," explained Jessica Caldwell, director of industry analysis for Edmunds.com.
"Toyota needs to stay competitive in this area while rebuilding confidence in their vehicles," Caldwell added.
The manufacturer did just that earlier this week as part of a campaign that runs through April 5. Toyota is offering zero-percent APR financing for up to 60 months for qualified buyers on several 2010 models.
While Toyota made future plans, Edmunds.com calculated that all Japanese manufacturers averaged $1,853 in combined incentives per vehicle sold during February. It marked an increase of $270 from the previous month.
European automakers increased incentives spending by just $12 from January to February, according to the site. The figure came in at $2,494 per vehicle sold.
However, the other group of foreign manufacturers actually posted a sharp drop in incentive spending last month. Analysts found that Korean automakers decreased incentives spending by $630 to $1,676 per vehicle sold.
Domestic manufacturers, meanwhile, constituted the segment where the greatest jump in incentives came in February. Edmunds.com found a rise from $2,968 in January to $3,394 per vehicle last month.
In terms of the industry's aggregate incentive spending, site officials estimated that it totaled approximately $2.03 billion last month, up 24.8 percent from January. They said Chrysler, Ford and General Motors spent an aggregate of $1.2 billion or 58 percent of the total while Japanese manufacturers spent $571 million or 28.3 percent. European manufacturers compiled $165 million or 8.2 percent, and Korean manufacturers used $110 million or 5.5 percent.
What struck Edmunds.com senior analyst Michelle Krebs most was not what Ford and GM spent on incentives, but what those incentives did for each automaker's sales performances.
"February was the first time since August 1998 that Ford outsold General Motors," Krebs shared at AutoObserver.com.
"Ford has a lot of momentum right now, while GM has essentially stopped selling four of its brands," Krebs added.
Moving on to a discussion about various vehicle segments, Edmunds.com found that large trucks had the highest average incentives in February. The site estimated it was $4,194 per unit sold.
Trucks were followed by premium luxury cars in February incentives at $4,023.
On the other side of the incentive spectrum, site analysts revealed that subcompact cars had the lowest average per vehicle sold at $1,205, followed by sport cars at $1,394.
Edmunds.com pointed out that its analysis of incentives expenditures as a percentage of average sticker price for each segment indicated large trucks averaged the highest at 12.4 percent. Trucks were followed by large cars at 11.4 percent of sticker price.
Conversely, site analysts noted that premium sport cars averaged the lowest with 1.7 percent and sport cars followed with 4.2 percent of sticker price.
When comparing all brands in February, Edmunds.com found that smart spent the least at $341, followed by Scion at $426 per vehicle sold.
Meanwhile, the site determined Lincoln spent the most at $5,568 followed by Hummer at $5,195 per vehicle sold.
Relative to their vehicle prices, Edmunds.com said Saturn and Hummer spent the most, 14.9 percent and 13.6 percent of sticker price, respectively. Analysts pointed out the smallest percentages in February came from Porsche 1.4 percent and smart at 2.3 percent.
Edmunds.com indicated that its monthly True Cost of Incentives SM Report takes into account all automakers' various U.S. incentives programs, including subvented interest rates and lease programs, as well as cash rebates for consumers and dealers.
To ensure the greatest possible accuracy, site officials stress that they base their calculations on sales volume — including the mix of vehicle makes and models for each month — as well as on the proportion of vehicles for which each type of incentive was used.
|Edmunds.com True Cost of Incentives for the Top Seven Automakers|
|Automaker||February 2010||January 2010||February 2009|
|Chrysler Group (Chrysler, Dodge, Jeep)||$3,388||$3,008||$5,608|
|Ford (Ford, Lincoln, Mercury, Volvo)||$3,301||$3,039||$3,384|
| General Motors (Buick, Cadillac, Chevrolet,
GMC, Hummer, Pontiac, Saab, Saturn)
|Honda (Acura, Honda)||$1,406||$1,212||$1,249|
|Hyundai (Hyundai, Kia)||$1,676||$2,306||$3,367|
|Nissan (Infiniti, Nissan)||$2,602||$2,424||$2,572|
|Toyota (Lexus, Scion, Toyota)||$1,833||$1,452||$1,682|