SANTA MONICA, Calif. — Edmunds.com analysts found the percentage of new-vehicle sales in December that came from old model-year units was down significantly from the same period of 2008, and this greatly influenced incentives.
As a result, they discovered that the average incentive was $2,542 per vehicle sold in December 2009. That incentive was 6.7 percent lower or $167 less than the previous month, and more noteworthy, 11.2 percent less or $320 below what was given in December 2008.
"In December only about 24 percent of new cars sold were from the 2009 model year, so the average incentive expenditure is relatively low compared to November and last December when the old model year vehicles made up closer to half of the new-car sales," explained Jessica Caldwell, director of industry analysis for Edmunds.com.
"If we only look at 2009 model-year vehicles, where the real deals were, automakers spent an average of $4,317 per vehicle sold in December," Caldwell added.
The average incentive given by domestic automakers was significantly higher than the industry norm. Analysts determined that domestic OEMs spent an average of $3,425 per vehicle sold in December. The amount was a bit lower than the $3,684 the OEMs doled out during November.
Meanwhile, Edmunds.com found that European, Japanese and Korean automakers all decreased their incentives in December as compared to the previous month.
European OEMs dropped incentives spending by $136 to $3,063, while Japanese automakers decreased incentives by $80 to $1,564. Korean automakers lowered their incentive amount most, decreasing it by $147 to $1,866 per vehicle sold.
All together, Edmunds.com revealed that the industry spent $2.57 billion in aggregate incentives last month. The total was up 26.9 percent from November.
The Big 3 automakers composed more than 60 percent of that total amount. Analysts said Chrysler, General Motors and Ford used $1.6 billion for incentives.
Elsewhere, $621 million in industry incentives came from Japanese nameplates, which computed into 24.1 percent of the December total. European OEMs pushed out 10.8 percent of the incentive total, $279 million, while Korean automakers used just $118 million or 4.6 percent.
Moving onto a discussion about incentives for a specific vehicle segment, Edmunds.com shared that premium luxury cars had the highest incentives last month at $4,838 per unit sold. That amount was followed closely by incentives for large SUVs, which came in at $4,831.
Conversely, subcompact cars had the least amount of incentives at $1,047 per vehicle sold. Compact cars trailed not far behind at $1,491.
Edmunds.com also revealed an analysis of incentives expenditures as a percentage of average sticker price for each segment. Site officials found that large trucks averaged the highest, 12.4 percent, followed by large SUVs at 11.9 percent of sticker price. However, sport cars averaged the lowest with 4.7 percent and premium sport cars followed with 4.8 percent of sticker price.
When highlighting specific brands, analysts determined that Scion spent the least in incentives per vehicle sold during November, divvying out $361. Following up closely was smart at $413.
Relative to their vehicle prices, officials pointed out that Porsche spent 1.5 percent and Subaru spent 2.0 percent, the two smallest percentages
What drew plenty of nationwide attention were the incentives to move Saturn and Pontiac units, which were the top two amounts in December. Edmunds.com pointed out that Saturn had the highest at $5,925, followed by Pontiac at $5,882.
Pontiac and Saturn also had the largest incentive spending relative to their vehicle sticker price. Analysts computed that Saturn was at 24.2 percent while Pontiac was at 21.6 percent of sticker price.
"In reality, the sale on Pontiacs and Saturns was totally overhyped, in part because there weren't that many to sell," noted senior analyst Michelle Krebs in her report on Edmunds' AutoObserver.com.
"However, the urgency of the closeout sale motivated people to storm the dealerships — a pure psychological reaction to a shortage," Krebs added.
|True Cost of Incentives for Top Seven Automakers|
|Automaker||December 2009||November 2009||December 2008|
Edmunds.com Issues Caution about SAAR Numbers
In other news from the company, Edmunds.com refuted the notion that the Seasonally Adjusted Annual Rate for December should be celebrated as overly positive indicator of a substantial economic recovery. Analysts contended that a large portion of the population could be classified as "bargain-hunters."
Edmunds.com chief executive officer Jeremy Anwyl stressed that recession-era buyer psychology shifts behavior in a way that reduces the accuracy of the U.S. Bureau of Economic Analysis' established seasonal adjustments upon which SAAR is based. Anwyl made that assessment despite numbers that indicated strong December sales.
"One could argue that in general, during a recession SAAR overstates automotive demand in summertime and during the December holiday season, and understates it in most of the rest of the year," Anwyl explained.
Edmunds.com pointed out that shoppers have been trained to count on holiday shopping and year-end deals. Officials went on to stress that many bargain-hunting shoppers also wait for the deals to be announced, and during a recession this triggers a lower SAAR in the autumn.
This year, analysts determined that most automakers introduced holiday deals midway through November to extend the year-end shopping season. Consumers responded, boosting SAAR in November and December.
Edmunds.com went on to predict that as a result SAAR may be deflated in the early part of this year since the great holiday deals likely pulled in bargain-hunting shoppers from the future.
"If early 2010 SAAR numbers are low relative to the end of 2009, SAAR may cause unnecessary concerns that the economy is not recovering as quickly as expected," Anwyl cautioned.
"However, the next seasonal discount period — the summer — is sure to generate a significant boost in SAAR that will make everyone feel better again," he added.
Edmunds.com's analysts also researched U.S. automotive SAAR back to 1967 and found that in most years, SAAR was relatively stable, typically within 5 percent of actual annual sales volume. However, in times when the economy was rocked — such as 1981, 2001 and 2009 — they found the monthly variation from actual average sales volume varied wildly.
In those years, the site learned that SAAR averaged a difference of nearly 10 percent from actual annual sales volume.
During the current recession, Edmunds.com contends that monthly SAAR is averaging a difference of more than 14 percent from actual annual sales volume. Analysts pointed out that the largest variation on record is 37.8 percent, which occurred in August of last year when Cash for Clunkers was in full force.
Edmunds.com analysts reiterated that they expect 11.5 million new cars and light trucks will be sold this year.