No incentives war in 2011
5:55 pm
Fri August 19, 2011

Will the U.S. see an incentives war among car companies?

Leading auto consulting firms are lowering their forecasts for U.S. auto sales in 2011. 

But it is unlikely to send automakers into a panic.

Some observers say the lower volume of sales means the U.S. is ripe for an incentives war among car companies.  

But Anthony Pratt with the auto consulting group R. L. Polk doesn’t see it happening.   He says a lot of the triggers that set off incentives wars in the past are missing. 

For one thing, U.S. car companies are making money at the lower volume of sales. 

They’ve kept inventories pretty low, too.  So there’s no, well, no incentive to give incentives. 

And somebody has to start the war.  All eyes turn to the Japanese, who had a particularly poor spring in the U.S. due to the devastation from the tsunami in Japan.

But Pratt says Japanese car companies are still having trouble meeting customer demand.  Incentives would just call attention to it.

"Our assumption is that they won’t be promoting heavily at the end of the model year to draw consumers in -- only to not have the vehicles that they are hoping to buy," says Pratt.

R.L. Polk is considering lowering its forecast to 12.7 million vehicle sales this year, from 12.9. 

Pratt says the good news is that isn’t really a big drop.