Sales Incentives Rise as Carmakers Strive to Defend Share

Spending by carmakers on retail sales incentives in the U.S. surged 21% last month to more than $3,700 per transaction, according to Autodata Inc. That’s up about $500 from the marketwide average through the first 10 months of 2016.

But the objective isn’t to energize sluggish demand for small cars. The richest deals are being applied to crossovers, SUVs and pickup trucks that are already selling well.

Autodata says spending on discounts last month zoomed 30% on light trucks compared with 11% for cars. One reason: Trucks have far fatter profit margins with which to absorb discounts than do small car models.

But analysts say carmakers are spending heavily on strong-selling vehicles primarily to defend market share and see if they an eek out another full-year sales record in 2016. Retail passenger vehicle sales in the U.S. through November totaled 15.86 million units, a microscopic 6,400 units ahead of the same period in 2015, according to Autodata.

Car sales this year are down 8%, and light truck volume is up 7%. Autodata’s figures show trucks now account for 59% of the U.S. market, compared with a 55% share at this time last year and 52% in the same period in 2014.