Automakers Dangle Record $4,500 Discounts to Clear Old Inventory

(Bloomberg) -- Automakers struggling to clear inventory of older models from U.S. dealerships probably will offer richer discounts to consumers this month than ever before, according to J.D. Power.

Incentive spending likely will rise 12% to $4,538 per vehicle in November, the market researcher estimated Wednesday, exceeding $4,500 for the first time. The growth in automakers’ outlays to entice consumers is outpacing transaction-price inflation, J.D. Power said.

Car companies typically boost incentives from November to December by roughly 4%, so spending could be headed further into “unprecedented territory,” Thomas King, the vice president of J.D. Power’s data and analytics division, said in a statement. He called the trend “concerning for the health of the industry.”

J.D. Power projects total light-vehicle sales will run at an adjusted annualized rate of 17.5 million in November, a slight improvement from 17.4 million a year ago. The researcher expects industry deliveries to drop to 16.8 million in 2020, from about 17.1 million this year.

To contact the reporter on this story: Craig Trudell in New York at ctrudell1@bloomberg.net

To contact the editors responsible for this story: Craig Trudell at ctrudell1@bloomberg.net, Chester Dawson

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