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This article is from MSN's Carpoint and tells how GM has extended it's incentives (to include SAAB) on new cars. It seems to be working for them since sales are down only 3%, which is low compared to other major automakers.
Cheers.
Kent
Finance Deals Make It
a Great Time to Buy
by Mike Meredith
Call it automakers' renewed patriotism or simply hard-nosed capitalism—for consumers it's a great time to buy a new car.
To spur sales in the wake of the September 11th attacks, automakers are offering significant finance incentives, the likes of which buyers may not see again.
General Motors was the first to weigh in with its "Keep America Rolling" program, offering low-interest loans designed to bring new-car buyers into showrooms after sales had plummeted in September.
Ford Motor Co. quickly followed suit with its "Ford Drives America" incentive program, offering financing rates for Ford Division vehicles from zero percent on 2001 cars to 4.9 percent on 2002 trucks.
DaimlerChrysler's Chrysler group reluctantly joined GM and Ford last month with a similar financing plan. Although not as broad in scope as the GM and Ford programs, Chrysler offered no-interest financing on some new vehicles, but at that time excluded its most popular models, such as the 2002 Ram.
Battle Heats Up
GM announced on Monday that it will extend the incentives through November 18th, even though the program was originally designed to end October 31st. As of October 24th Ford had not announced an extension to its program, which is currently scheduled to end October 31st.
And the battle for customers continues to heat up. This week the Chrysler group announced a zero-interest program for the all-new 2002 Dodge Ram full-size pickup.
By the beginning of October, a number of other manufacturers had entered the zero- or low-interest arena, including American Suzuki, Toyota, Daewoo and Subaru, with special financing for certain models.
A consumer will save about $2,800 on an average new-car purchase with zero-percent financing, but the savings will go higher on more expensive vehicles.
Notably absent from the zero-interest offers are manufacturers such as Honda, Nissan, Volkswagen, Lexus, BMW and Mercedes-Benz, who have continued to rely on other sales methods.
But the addition of a program for the Ram and the extension of the GM plan confirm that the plans are generating results. September sales were higher than expected and October sales are trending even stronger.
Sales Better Than Expected
According to an October 2, 2001 article by Reuters, September sales for U.S. automakers were better than expected. While most analysts expected sales to fall between 12 and 15 percent, GM sales were down only 3 percent.
Ford sales were down 9.9 percent for September, but many analysts had predicted that Ford sales would drop as much as 20 percent. The Chrysler Division did post a drop of 28 percent, compared to record sales in September 2001.
And while finance incentives are credited with September sales that were better than expected, October sales are at the highest rate of the entire year.
Through the middle of October, vehicles were selling at a seasonally-adjusted annual rate of 18 million units, significantly higher than the 15.9 million vehicle rate in September.
Consumers Aware
According to an article in the industry journal Automotive News, 77.7 percent of consumers are aware of the incentive programs and 18.8 percent cited the interest rates for starting their car shopping.
Based on the results of a survey conducted by OpinionSurveys.com, a unit of Dohring, Automotive News stated that 27.1 percent of the consumers who purchased or leased a vehicle in September were influenced by zero-percent financing.
What Cost to Makers?
While the low interest rates are certainly generating sales, they come at a very high price for the automakers.
Ford said the low-interest rates resulted in a $2 billion increase in marketing costs. Last week Ford announced a $692 million net loss for the third quarter.
Ford chief financial officer Martin Inglis acknowledged the interest rates did "jump start sales," but he also cautioned that " . . . marketing costs rose to what I consider unsustainable levels."
According to a Reuters report, Inglis indicated the low interest rates will likely lose their effect, and that the rates had "pulled ahead" buyers who would have purchased vehicles at a later date.
"It will be challenging for the industry once we move off these levels of incentive to find out the resulting level of demand," Inglis stated. "I see it falling off, and then there will be payback."
General Motors recently announced it will extend incentives tied to the "Keep America Rolling" program through November 18th, 2001.
Although initially not as broad in scope as the programs of GM or Ford, DaimlerChrysler recently added a zero-interest offer for the redesigned 2002 Ram pickup.
posted by 63.127.20...
, Fri, 2 Nov 2001 09:11:08
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