By Shawn Langlois, MarketWatch
Tuesday, October 19, 2010
American carmakers have seen sales rebound even as they cut incentives to buyers. At the same time, some foreign carmakers have been increasing promotions.
SAN FRANCISCO — Not too long ago, domestic carmakers used every incentive trick in the book to lure customers to their showrooms, while Japanese rivals sat back and gorged on market share. • Now it looks like the hubcap is on the other wheel.
General Motors, Ford and even Chrysler Group, with Italy's Fiat in the driver's seat, are the ones slashing their spending and still managing to unload their cars and trucks.
Toyota and Honda, meanwhile, are throwing more cash on the hoods of their vehicles, but are still losing ground.
"It's as if the world has turned upside down," said TrueCar.com analyst Jesse Toprak.
Specifically, the Buick brand, a favorite of the upper crust in China, has seen its sales surge here at home by 57.5 percent for the year to date. It has accomplished this feat not with more 0 percent financing, nor with hefty cash-back deals, but by actually cutting back on incentives by 14 percent.
Same thing is true with Cadillac. Sales for the upscale GM brand are up 43.8 percent; incentives are down 13.8 percent. To a lesser extent, GMC, Chrysler, Jeep and Dodge are all selling more cars with fewer promotions.
Overall, industry sales have jumped 10.4 percent to 8.6 million this year compared with 2009, while incentive spending had been curtailed by 1.4 percent to $2,768 per vehicle, according to TrueCar.com.
Hyundai was able to cut back the most, down by 37.3 percent from a year ago. Nevertheless, the Korean brand managed to improve sales by almost 20 percent.
On the flip side, Toyota, still hurting from its recalls, has seen its sales mostly sit out the broader recovery, with a mere 1.4 percent increase. Not even a 30.7 percent rise in incentives could change that.
Honda sales have gained a mere 1.1 percent in the first nine months compared with the same period in 2009. The brand has increased its level of spending the most, by 36.4 percent, though it still remains one of the thriftiest brands in terms of incentives.
Honda and Toyota, with average incentives of just more than $2,000 per vehicle, are still offering much less than U.S. rivals, which are twice that in some cases. But that long-lasting trend is changing.
"Absolutely, this is a very dramatic reversal," Toprak said, "made even more significant by the fact that GM and Ford, in particular, are recovering at this surprising pace during such fragile economic times."