The incentives war has seen these major car companies competing against one another to offer bigger and bigger incentives, thereby driving down their own prices and undermining their profitability. The extent of the incentives has become so large that some Ford models have almost 23% of their price in incentives - a staggering figure in itself, with the other major companies not too far behind. Porsche's Chief says that the problem that these companies has to fix is forecasting their demand and supply more accurately.
This may be easy for Porsche, which has relatively low-volume and therefore a big advantage over its larger competitors, but nevertheless Schwarzenbauer is right - for the car companies to experience growth and profits, it needs to cut back on incentives. If it continues at the rate that it has been going at for the last few years, it won't be long until the auto industry, in America especially, falls into a death spiral, which will have an impact on the American economy, which will in turn affect the entire world market for cars.
[Source: Ward's Auto]