U.S. Vehicle Incentives Fell 11 Percent

Thu Nov 4, 2004

DETROIT (Reuters) - The average incentive on cars and trucks sold in the United States fell by nearly 11 percent in October from September as automakers ramped up inventories of new 2005 model year vehicles with fewer discounts, an industry tracking group said on Thursday.

Incentives across the industry averaged $2,781 per vehicle in October, down from $3,120 in September, with General Motors Corp. (GM.N: Quote, Profile, Research) and Ford Motor Co. (F.N: Quote, Profile, Research) leading the industry lower, Autodata said in its monthly report.

The weaker incentives contributed to a 7 percent drop in industry sales from September to October to a total of 1.33 million vehicles, or a seasonally-adjusted annual rate of 17.0 million cars and trucks.

GM led major automakers with an average of $4,051 per vehicle in October, excluding its Saab brand, down from $4,340 the preceding month. On Wednesday, GM posted a 5 percent year-over-year drop in October sales, and its U.S. market share fell to 25.4 percent, down from 27.5 percent year-to-date.

"GM will likely strive for market share targets at year-end, which we believe will translate into even more deals, most likely in December," Merrill Lynch analyst John Casesa said in a research note on Thursday.

Ford incentives, excluding its foreign brands, fell to an average of $3,425 per vehicle from $3,808, Autodata said. Ford sales also fell about 5 percent in October.

The Chrysler side of DaimlerChrysler AG (DCX.N: Quote, Profile, Research) (DCXGn.DE: Quote, Profile, Research) had a more moderate decline in its incentives, to $3,539 per vehicle from $3,628 in September, Autodata said. Chrysler sales rose 2 percent in October, its sixth straight month of higher results.

Toyota Motor Corp. (7203.T: Quote, Profile, Research) and Honda Motor Co. Ltd. (7267.T: Quote, Profile, Research) trimmed their already modest offers. Toyota's incentives fell to an average of $624 from $845, while Honda's fell to $698 from $704. Nissan Motor Co. Ltd. (7201.T: Quote, Profile, Research) hiked its incentives to an average of $2,194 from $2,137 previously.

All three of the Japanese automakers reported a double-digit rise in U.S. vehicle sales in October.

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