Automakers are tempting consumers with deep discounts as incentive to keep them buying amid bloated manufacturing capacity.
According to recent reports, car buyers received around $3,000 in incentives for new purchases in August. Autodata says this figure reflects an average 10% discount. Further, incentive spending increased 12% compared to the same period last year, fueled largely by major automakers.
Morgan Stanley auto analyst Adam Jonas said the higher inventory and spending discounts has sparked concern that the US auto market is plateauing. However, he also noted that car companies have a full bag of tricks to keep buyer interest, which includes cheap financing, subsidized leases and low-interest loans.
“We would not underestimate the industry’s ability to keep the cycle going,” Jonas noted.
Industry figures reflect a growth in inventory with General Motors leading the pack as its output increased 21%, according to industry monitor WardsAuto.com.
September production is also forecast to grow at a modest pace, Wards said, with full-year industry production seen to hit a slight increase.
Further, the auto industry’s 61 days of supply pegged at August 31 marked a 12 year high for total stock levels.
