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duplicate post from SA:Ford

Just finished pouring over some numbers from TrueCar on September incentive spending. The industry at large reduced incentive spending by 6.7%, so most manufacturers were cutting back. Ford was one of the largest reductions, with per vehicle incentives off 7.8%. The two manufacturers who went against the grain were Hyundai and VW. Hyundai's were up 6.8%, but they remain the lowest in the industry by a wide margin. VW incentives were up in a big way as they make a push for relevance in North America. Their spending went up 29%, or over $500 per unit. Ford is still slightly higher than the industry average, but their incentives are well below that of Chrysler ($600 less per unit) and GM ($400 less per unit).

Another consideration is transaction price and the incentive cost as a percentage of transactions. The reason this is significant is that the incentives take less of a bite from profitability as the transaction prices rise. Using the Hyundai example, most of their vehicle sales tend to be at the low end of the market, so they need to spend less on incentives to remain profitable. So, while Ford spends over $1300 more per vehicle on incentives their average transaction price is nearly $10K more than Hyundai.

TrueCar also publishes a list that shows incentives as a percentage of vehicle sales price. Ford is right at the industry average here as well (8.2%). The lower the percentage the better. Hyundai leads the way here as well at 5.8%. Next best is Toyota at 7%. The bottom 3 are Chrysler, Nissan and GM. Honda, incidentally, is slightly behind Ford at 8.5%. The figures, for whatever reason, don't include many of the luxury brands like Mercedes and BMW.

Ford continues to hold back and reduce their incentive spending, which should contribute to next week's quarterly report. Having something to offset the carnage in Europe would be welcome. Here's the TrueCar data:

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