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Are incentives drying up?

Posted by Bill Sluben on December 11, 2009

Consumers, long conditioned to look for the greatest incentive among vehicle manufacturers, may find that the well is starting to dry up.

Car-shopping Web site Edmunds.com said the average automotive manufacturer incentive in the U.S. was $2,713, up 1.9% from the prior month, noting GM, Chrysler and Ford spent the most on incentives.  While GM’s November sales fell just 1.5%, the company outspent its rivals on incentives by at least $1,000 a car, subsidizing $4,300 per vehicle, says Edmunds.com. If Whitacre pulls back too much on the discounts, sales could plummet.  However, the long term strategy has been clearly communicated to focus on value and quality and not on discounting.  Discounting, with its fickle and fleeting mentality, ultimately will not build the brands.

Nissan spends about $2,000 to $2,500 per vehicle on incentives, compared with $1,500 to $1,700 at Honda and Toyota.

Chrysler also has been reducing incentive spending. Average incentives for Chrysler fell 6.8 percent, or $262 per vehicle, in November

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