Car sales are booming, but automakers are giving up a lot too
U.S. car sales were strong in October, thanks in no small part to incentives from automakers.
TrueCar reports automakers doled out an average of $3,104 last month per vehicle sold, a 14 percent jump from a year ago. The company reports the auto industry “remains healthy and automakers are enjoying double-digit revenue gains in advance of the holiday season.’’
Consumers have been purchasing new cars steadily since the U.S. auto recovery effort began in 2010. Incentives, like zero percent financing for several months or cash back offers worth thousands of dollars have been a part of that equation as motorists moved to trade in their older vehicles.
But does such a strong uptick in incentives mean the manufacturers are trying harder to move cars?
Last month’s incentive value amounted to 9.5 percent of the average transaction price (ATP) of $32,529. But AutoNews reports if incentives continue to rise above 10 percent of ATP, they may “start to unravel value for the industry’’ according to TrueCar’s vice president of industry insights, Eric Lyman.
However, Lyman also said the current incentives offered by automakers is not a cause for alarm yet.
Several automakers, including Ford and General Motors, are ramping up incentives ahead of the upcoming holidays. Chevrolet launched its “Black Friday All Month Long’’ campaign last week while Ford launched its own two-month long promotional event called “Friends and Neighbors.’’
AutoNews reports U.S. new vehicle sales jumped by 14 percent last month to 1.46 million, as low fuel prices helped spur greater sales of pickup trucks, SUVs, and minivans.
Read the full AutoNews story here (a subscription may be required).
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