At the Big 4, Incentive Spending Drops, Even as Sales Dip

Old truisms apparently do not apply to auto finance.

At least for now.

When car sales fall, generally captives counter with greater subvention. But after years of incentives marching higher, incentives are dipping.

At the Big Four — Ford, General Motors, Fiat Chrysler Automobiles, and Toyota — the aggregate incentive per unit fell 1.9% to $4,150, according to Cox Automotive data released yesterday. While Ford’s incentives-per-unit climbed 7.3% to $4,709, the steep 17.7% drop to $2,622 per unit at Toyota pushed the overall Big 4 incentive change rate into the negative range.

The seasonally adjusted rate of car sales last month settled in at 17.4 million, higher than expected, but well below September 2017’s Hurricane Harvey-fueled rate of 18.2 million.

However, it should be noted that the truism around incentives was intact at Mercedes-Benz last month, where a 1% year-over-year decline in car sales to 31 million units was coupled with 19% higher incentive spending to $5,943 per unit, according to Autodata via JPMorgan Chase & Co. Mercedes’s incentives increased at the greatest rate last month among those OEM tracked by JPM.