GM Reports 326,300 June Deliveries down 22 percent

[SmallBlock]

Originally Posted by Realist

GM not playing the incentives game? Are you serious?

According to Edmunds (http://www.edmunds.com/help/about/pr...1/article.html), for May 2007 average incentives for GM were about the same as Ford, Chrysler incentives were highest, and incentives for Nissan, Toyota, and Honda were significantly lower than the American Big 3.

Please don't be saying GM "isn't playing the incentives game" when GM sales tumbled for June 2007 despite GM having average incentives almost 3 times more than that of Toyota or Honda.

Look at the numbers your own article states "Realist". Do you really want to be using that article as your platform?

1) GM, Ford, and Chrysler are full line manufacturers with average transaction prices weighted closer towards the $40,000 mark than the $20,000 because of their bias towards trucks. The Japanese are not all full line manufacturers, with lower average transaction prices due to their reliance on sub/compact/midsize vehicles.

I would expect overall absolute incentives to be higher on vehicles with higher transaction prices than those on small cars/lower prices.

Translation: You know what, that $750 off that Silverado isn't doin' much for me, but man $750 off of a Corolla? That's like 5% off! (Toyota Corolla incentive was $750 for 06/07).

2) You need to look at incentive trends here vis-a-vis sales to see what's driving the market. Look at the areas where Toyota "surged". Everyone wants to focus on the Tundra, so let's saunter over there. Hmmm. 0 for 60 on a six month old truck? $3000 on the hood? 126% jump over 2006's dismal sales? You betcha.

Let's compare that to the Silverado/Sierra twins, which are head and shoulders superior products. Only $1500 on the hood, and limited to applicability. So the market ran for the deal.

Incentives drove that market, which is THE NORTH AMERICAN SEGMENT. As pickup sales go, so goes the US Auto Market.

3) Let's use your Edmund's numbers. I see they say that their numbers are "combined" values for both dealer and manufacturer incentives. (Another convenient media slant ploy, but I'll save that rant for another post). Let's look at the Year-Over-Year trends.

First off, the hometown boys, and for most of us, the good guys:

Chrysler - 2%
Ford - 12.6%
GM - 9.7%

Let's contrast that to the bad guys from the land of the revengeful sun:

Toyota +36.1%
Honda +81%
Nissan -17%

Wow. That's pretty telling. You've got incentives from the asians not just jumping, but SKYROCKETING (81%!!!), while you have the Big 3 actually exercising restraint and reducing their incentive outlay.

But of course, because you're the "Realist" you probably won't agree if I say all this. So maybe you'll listen to someone who is Japanese:

"The sales boost (for the Japanese brands) came from the big incentives spending," said Atsushi Kawai, auto analyst at Mizuho Investors Securities in Tokyo. He added he expected a gentle rise at top Japanese brands on average for the rest of the year.

Where's your analysis Realist? Isn't it easier just to mail it in from Edmunds? Oh, wait. Maybe not.

Criticism is so easy.

[Realist]

You yourself said that GM's incentives on it's trucks currently are soft and not as big as Chrysler, Ford, or Toyota. Fair enough. But that still does not explain why incentives for the American Big 3 are almost 3 times the amount of Toyota and Honda incentives. Keep in mind those May numbers from Edmunds for Toyota *includes* the huge incentives on the Tundra, and also keep in mind Honda had no huge incentives on any one model compared to that of Toyota. Honda is not a full-line manufacturer, fair enough. But you cannot seriously tell me you do not consider Toyota a full-line manufacturer.

Also lets not forget Toyota sells a large number of Lexus vehicles in North America, with transaction prices that start at the mid 30s and quickly climb up. GM's Cadillac sales are only a fraction of Lexus sales. Furthermore, Cadillacs have a huge amount of incentives, as compared to Lexus vehicles which have almost no incentives at all.

Also, I would like to see some proof that the American Big 3 have higher average transaction prices than Toyota, or say Honda. Simply you saying it does not make it true.

Do you *really* want me to pick out other areas where Toyota has surged? How about the Camry, which outsold the Silverado for the month of June, yet had far less incentives? How about the Lexus LS, which has practically no incentives at all, and is a car for which average transaction prices exceed 70K. It should be pointed out that the most popular Tundra models are not the base models, but the top model 5.7L equipped crew cabs.

Your use of percentages to show a trend of increases or decreases is flawed. When someone like Honda had average incentives of say $500, increasing by another $500 percentage-wise would seem like a huge jump. Compare that to a company like Chrysler, who had average incentives around $3,000, then a $500 increase in incentives would seem small percentage-wise, even though in reality they would be increasing incentives by the same amount.

Here is the actual Edmunds data:

True Cost of Incentives for the "Big Six" Automakers
Automaker
May 2007
April 2007
May 2006
Chrysler Group
$4,050
$4,250
$3,668
Ford
$3,040
$3,021
$3,209
General Motors
$2,963
$2,813
$2,761
Honda
$1,399
$1,069
$922
Nissan
$2,083
$1,955
$2,553
Toyota
$1,140
$1,027
$886

It does not matter about percentage increases year-over-year in this case; looking at the fact GM and Ford average incentives are almost 3 times larger than that of Toyota, and Chrysler almost 4 times. Whether or not this includes dealer incentives is also not a big issue, because the comparison is apples-to-apples, and includes dealer incentives for *all* automakers, not just the American Big 3. So including manufacturer incentives and dealer incentives, the facts still speak for themselves: average GM incentives are much larger than that of Honda, or Toyota, both of which had sales increases in June compared to the huge decrease GM saw.