European luxury makers are “being pulled into the U.S. incentive battle to some degree,” say industry analysts in London.

Audi AG, DaimlerChrysler AG (Mercedes-Benz) and BMW AG increased their U.S. incentives in April by an average 13%, the same as the U.S. Big Three.

“Up until now, European luxury brands had managed to largely escape the U.S. incentive battles, but perhaps no longer,” says J.P. Morgan Securities Ltd. analyst Himanshu Patel in a bulletin to investors.

Overall levels of the European luxury-brand incentives (average $1,335) remain far below those of the Detroit brands (average $3,308), and they represent a smaller percentage of the sales price in luxury vehicles. But the fact that incentives are rising reflects growing price sensitivity in the luxury sector.

Incentives also are growing in Europe, says Patel, “but in the U.S. they are publicized; they are loud and obnoxious. Europe is quieter.”

Although European auto makers use rebates and low interest rates as bait, they prefer to effectively cut prices by adding content instead, such as offering air conditioning. That seems to have less affect on reducing the value of used cars, Patel says.

U.S. incentives per vehicle
March April Change
GM $2,915 $3,402 16.7%
Ford 2,827 3,198 13.1%
Chrysler 3,014 3,282 8.9%
BMW 1,368 1,530 11.8%
Mercedes 850 978 15.1%
VW 1,513 1,502 -0.7%
Audi 1,518 1,710 12.6%
Source: J.P. Morgan Securities

There is no reliable data to measure incentive levels in Europe, partially because they differ in each of the 15 European Union markets.