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Automakers 'Incentify' Minivan Sales In June
by Karl Greenberg, Thursday, July 5, 2007, 5:00 AM

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Last month, automakers put more cash on the hoods of minivans last month, even though automotive incentives were down in June, versus the month last year. According to Edmunds.com's "True Cost of Incentives" study, U.S. auto incentives last month averaged $2,483 per vehicle, marking a $92 increase from May, and down $132 from the month last year.

Of the industry's overall $3.8 billion spend on incentives in the U.S. last month -- up from $3.7 billion in May -- Chrysler, Ford and General Motors together spent $2.6 billion, or 67.2%, while Japanese manufacturers spent $823 million, European manufacturers spent $322 million, and Korean manufacturers spent $119 million.

Per the study, which takes into account all forms of discounts, cash rebates, interest-rate deductions and leases, domestic automakers averaged $3,200 per vehicle last month, up from $3,139 in May. European automakers decreased incentives spending by $230, to $3,108 per vehicle sold, and Japanese automakers increased incentives spending by $163, to $1,484 per vehicle sold. Korean automakers increased incentives spending by $39, to $1,554 per vehicle sold.

Jesse Toprak, who heads industry analysis at Edmunds, says Honda and Toyota alone had higher incentives last month than they did in June last year. "The competitiveness of the marketplace seems to be catching up with the Japanese heavyweights."

"I think there's some significance in that they are no longer shying away from spending on vehicles experiencing low demand," says Toprak. "But the difference is that Toyota and Honda are very selective. They don't do blanket incentives, and if you look at the range you will see it ranges from zero dollars to over $4,000." He said that Toyota has virtually no incentives on the hybrid version of Camry, at one end, and $3,536 on the full-sized Sequoia SUV.

Because of the popularity among families of crossovers, or unibody SUVs, which drive less like trucks than cars and get better mileage, automakers have had to put more cash on minivans, with which they compete. Per Edmunds, automakers put a combined $3,900 per vehicle sold, even higher than large trucks, which carried an average $3,864 per vehicle. Sport cars had the lowest average incentives per vehicle sold.

"It's the fact that we have so many new introductions in terms of crossovers," says Toprak. "So they are grabbing limelight from minivans. If you look at practicality, minivans are superior, but they are hurt by their image, where crossovers are perceived as more fashionable."

"The flood of popular crossovers is taking its toll on the minivan segment - minivan incentives are at near record levels," comments Edmunds' AutoObserver.com Senior Editor Michelle Krebs. "It will be interesting to see how the minivan story plays out, with Ford and GM getting out of the market and Chrysler on the eve of introducing its new models."

On a brand-by-brand comparison, Mini spent nearly nothing on incentives, per Edmunds. Toyota's Scion division followed with only $68 per vehicle sold. Cadillac spent the most on incentives, per Edmunds, at almost $7,682 per vehicle, with GM sibling Saab spending the second most as a percentage of vehicle price. Second was Lincoln, which averaged about $5,430 per vehicle sold.

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