Higher incentives allow German luxury carmakers to post record in August 2014

Article by Andrew Christian, on September 8, 2014

German luxury carmakers were able to post their best sales month in eight years in August 2014 in the United States, thanks to higher discounts that BMW, Audi and Mercedes-Benz have been offering to buyers in the country. BMW was the biggest spender among the three in term of per-vehicle-incentives, hiking the figure 45 percent in August, according to researcher Autodata Corp.

Autodata also disclosed that Mercedes and Audi boosted their promotional spending by 30 percent and 71 percent, respectively. Higher incentive spending at an auto industry that driving economic growth at the US could be a cause of concern. In fact, the industry-wide average discount per vehicle had surged 5.5 percent in the first seven months of 2014.

Bigger deals allowed carmakers achieve 17.5 million vehicles in annualized sales rate in August. Akshay Anand, an analyst at Kelley Blue Book, remarked that because of increasing incentive spend, higher subprime lending, and longer loan terms, there is cause for concern and a reason why gains would slow down.

But German luxury carmakers are not alone in hiking discount offers. In fact, other mainstream carmaker also boosted their incentive spending like Nissan Motor Corp. (43 percent), Chrysler Group (24 percent) and Ford Motor Co. (23 percent), according to Autodata.

In August, spending per vehicle averaged $4,912 at BMW, $4,189 at Mercedes and $3,236 for Audi. Likewise, spending per vehicle averaged $3,856 at Chrysler, $3,595 at Ford and $3,587 at General Motors. Carmakers offering as luxury cars or full-size pickups tend to offer more incentives just to hike deliveries. [source: automotive news - sub. required]

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