Summary
Automaker incentives set a new record in December, the same month sales totals fell to their lowest levels in sixteen years.
Analysis
U.S. automakers, fearing the worst, came out with some of their biggest December incentive levels in at least six years. But last month's dismal vehicle sales - down 36.5 percent from December 2007 - show that incentives aren't working.
Incentives averaged $2,902 per vehicle, up 18 percent from December 2007. The average was the third straight in recorded monthly discounts, as incentives mounted in October and November amid the lowest demand in a quarter-century.
Automakers boosted incentives to raise consumer confidence. Consumer confidence hit a low last month in the monthly index conducted since 1967 by the Conference Board, a market information group.
Toyota Motor Sales, a company that a few months ago, seemed immune to the ills afflicting the Detroit Three, saw the largest percentage boost in incentives, almost doubling the company record December incentives it offered in 2007. Last month's Toyota incentives averaged $1,995, an 87 percent climb from December 2007. The automaker still saw December sales plunge 36.7 percent.
The drop marked Toyota's second straight drop of more than one-third, despite offering zero percent financing since October.
Ford offered the highest incentive amounts: $4,029 per vehicle. Chrysler followed, offering an average of $3,667, General Motors averaged $3,661, Nissan $2,251 and Honda $1,218 per vehicle.
Full-sized pickups averaged the highest of any segment, giving consumers 16.5 percent of the sticker price.
Lincoln ($5,975) and Saab ($5,508) spent the most per vehicles of any brands. Mercury and Jeep topped the industry in initiatives as a percentage of sticker price, offering deals worth 15 percent of their vehicle prices.
The incentives mentioned include interest rates, lease deals and rebates to dealers and consumers.
Winning the award for the most imaginative incentive goes to Hyundai, which announced this week an incentive that allows the customer to return any Hyundai vehicle they purchase within a year if they if they can no longer make the car payments because of a change in circumstances, such as a job loss, medical issue or bankruptcy.
