Incentives at Lowest Level in 5 Years

U.S. automakers spent less money on cash-back and financial incentives in April, according to Bloomberg. The average incentive on a new car was $2,320 in April, down about 14% from a year ago. It was the lowest level spent since October 2005.

For car shoppers, that’s not good news. The reduction in incentives was mostly the result of tight inventories, partly because of the earthquake and tsunami in Japan in March. Honda and Toyota have warned their dealers that inventory for vehicles would be tight throughout most of 2011, and Nissan recently postponed its big annual spring sales event.

Toyota reduced incentive spending by 3.1% in April, according to Autodata, an automotive statistical data provider. At $1,885 per vehicle, Toyota spends very little on incentives compared with its competitors, but the Camry and Tundra might get better deals this month, Toyota dealerships told Bloomberg.

Nissan reduced incentive spending by 33% in April, to $1,998 per vehicle. Honda was the only major Japanese automaker to raise incentives — by 8.7%, or $2,171 per vehicle.

Production pressures may lead traditional shoppers to look at domestic and Korean makes, but new, hot entries from those automakers may not have incentives attached to them.

Cadillac, GM’s luxury division, didn’t offer any cash-back rebates on its 2011 models in April, according to AIS Rebates, an incentive data provider for car dealerships. GM doesn’t offer any cash back for its Chevrolet Cruze, Aveo, Equinox or the GMC Terrain, AIS Rebates said.

Ford and Chrysler also reduced incentive spending by about 20% each, Autodata says. A recent search shows that Hyundai is offering few incentives, and with popular new models like the Hyundai Sonata and Elantra, we can understand why.

Automakers Cut U.S. Sales Incentives 14% in April to Lowest in Five Years (Bloomberg)