Figures released yesterday (July 4th) revealed that large incentives to stimulate the automotive industry have failed to deliver a meaningful return.

Last month (June) there was a 48 per cent year-on-year increase in the average discount for each vehicle, but sales increased by only four per cent.

All major carmakers increased their incentives, with General Motors raising theirs by 52 per cent, an increase of $1,343 from the same month last year.

The Japanese Big Three also joined in, an indication of just how serious the slump in sales figures is for the industry.

Deals such as no-interest loans or down payments and cash rebates have all been used by the companies in an attempt to lure the consumer back into buying.

Merrill Lynch analyst John Casesa said that some deals from GM could offer buyers a real terms discount of 25 per cent on the usual price of a vehicle.

Although prices are quietly rising to accommodate the incentives, deflation is such that they are unlikely to increase significantly.