US automakers rely on incentives to keep sales up image

As the auto market in the US starts to show signs of slowdown, automakers have started to push harder on incentives, analysts says.

The demand for new cars in the United Sates is starting to cool down and the industry’s sales results in May could be a proof of it, as deliveries last month fell for the second time this year. Therefore, to keep the flow going, more automakers have started to offer bigger rebates and better leases. According to a report issued by Wells Fargo & Company, citied by Bloomberg, the average new vehicle incentive has increased to 7.9 percent of a vehicle’s market value, as of March, compared with 7.2 percent in the same month a year ago. Also, a recent analysis made by Experian showed the auto leasing is currently booming, with more than 30 percent of new vehicles buyers relying on this financing option in the first quarter of the year.

Separately, Kelley Blue Book said the estimated average transaction price for light vehicles in the United States was 33,845 dollars in May and new-car prices have increased by 1,139 dollars, or up 3.5 percent, from a year earlier, while decreasing 116 dollars from April. “Continuously growing demand for SUVs and trucks helped push overall average transaction prices up this month,” said Tim Fleming, analyst for Kelley Blue Book. “The overall share of light trucks in May 2016 should be around 60 percent, up from 55 percent in May 2015.” The Detroit automakers are benefitting the most from this trend, as their transaction prices have jumped by 4-6 percent.

Via Bloomberg