Average incentive spending across all brands grew for the third consecutive month on an annual basis reaching $2,536 in April. April’s increase equates to a 4.5% lift relative to what was recorded during the same period last year, quite a bit higher than February’s 0.6% and March’s 0.9% increases. While new sales improved as a whole in April, many manufactures substantially increased incentive spending to keep things moving in a positive direction.
At a brand level on the mainstream side, Hyundai increased spending more than any other manufacturer as average spending rose by 31.4% compared to last year. It’s important to point out that overall brand spending only totaled $1,161 per unit, which is still very low compared to the market average. Niche brand Fiat spending also jumped up substantially in April by an average of 29.1%, spending reached $2,484 per unit sold in April.
Another heavy handed increase came from domestic powerhouse Ford, brand spending increased by 23.2% relative to last year. Ford’s total average incentive spending reached $2,872 per unit, which placed them a couple hundred dollars over the total market average. Rounding out the top five mainstream brands were Buick and Volkswagen. Buick juiced offers by 16.5% while Volkswagen followed closely behind with a 16.3% increase relative to last year.
On the luxury side of the market spending didn’t increase as intensely as on the mainstream side, the brand with the biggest increase was Volvo which spiked spending by an average of 23.9%. Volvo incentive spending was on par with the total market average, brand spending reached $2,532 per unit sold.
Despite having lots of new relatively new product to choose from, Cadillac incentive spending also increased by a substantial 20.4%. Cadillac’s per unit average of $4,647 was higher than all other luxury and mainstream brands save jaguar. Rounding out the top five luxury brand increases were Infiniti (12.7%), Land Rover (12.5%), and Mercedes-Benz (10.5%).
Although incentive spending grew materially in April, a few brands did actually pull back on offers. On the mainstream side, Honda decreased spending by 39.5% compared to last year to an average of $1,457 per unit sold. Jeep also pulled back by a substantial 25.1% across all models, spending averaged $1,930 per unit sold. On the luxury side of the market, Lexus decreased spending by 15.0% and Lincoln also pulled back by an average of 12.1%, however Lincoln spending was still super high averaging $4,275 per unit sold.
Considering that incentives have risen for three straight months, the next few months will be particularly telling in terms of how OEMs react to slower new vehicle sales growth, and if they will reduce production to preserve profits or continue to increase incentives to keep sales momentum going.