Auto Spend To Rise 7%

Ad spending in the U.S. auto industry this year is expected to grow at a 7 percent rate to an estimated $10.2 billion—despite flat vehicle demand from new buyers—compared with a 6.2 percent rise in 2003 to $9.5 billion, according to new research from Merrill Lynch.

“There are two main reasons that we forecast steady ad spending growth,” writes the report’s author, analyst John Casesa: “Intense incentive activity, with supporting deal-related advertising, to stimulate demand in the face of excess assembly capacity and record new product launch activity in the next 24 months, especially at Ford, European and Korean manufacturers.”

Casesa suggests that ad spending in the auto industry is not only increasingly becoming a fixed cost of doing business, but also a rising one.