- Jan 7, 2002
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General Motors Corp., hoping to revive sales and assure consumers concerned about rising interest rates, is offering new car and truck shoppers a rare opportunity to lock in today's low finance rates on car and truck purchases over the next decade.
Under the program -- nicknamed "Lock 'n' Roll" -- qualified customers who purchase a new 2005 GM car or truck this month through the automaker's GMAC credit arm can finance an additional GM model at the same interest rate. The consecutive finance terms can cover up to 10 years. GM is dangling the first-of-its kind offer as part of a year-end sales push and timing the promotion to today's Federal Reserve Board meeting. The board is expected to raise interest rates today, a move that could make it more expensive for automakers to offer no-interest or low-interest financing deals. If interest rates remain at current levels, GM's offer will still stand.
"If the Fed moves, it will be a wake up call for consumers that (interest rates) are not going to stay low forever," said Mark LaNeve, GM North America vice president of marketing and advertising. "We're going to assume the risk."
GM is currently offering zero-percent financing on 36-month loans, 2.9 percent financing on 48-month loans and 3.9 percent on 60-month loans for eligible buyers. The second vehicle must be purchased before the expiration of the financing period on the first purchase.
The deal applies to all GM brands, including Chevrolet, Buick, GMC, Pontiac, Hummer, Saab and Saturn.
Automakers are resorting to gimmicks to drive showroom traffic now that even large cash rebates and free financing deals have lost some of their allure with customers. Last year, GM launched a 24-hour test drive program in April 2003 hoping to attract new customers who had abandoned the automaker's lineup. This past spring, GM gave away hundreds of vehicles in a promotion called "Hot Button." To participate, customers visited a GM dealership, sat in a vehicle and hit the OnStar button to find out if they won a car. Then in September, GM sparked sales by offering zero-percent interest rates for 72-month loans over a 72-hour period. Ford Motor Co. launched a competing version of the sale.
Despite the special offers and incentives averaging more that $4,200 per vehicle this year, GM's U.S. new car and truck sales rose just 0.6 percent this year. Overall industry sales are up 1.4 percent. And GM's aggressive offers have not translated into market share growth. Through October, its share of the U.S. market has slipped to 27.5 percent from 27.7 percent a year ago, according to Autodata Corp.
GM plans to launch a major advertising campaign today through print, television, Internet and radio outlets to promote the "Lock `n' Roll" deal. Print ads will ask, "What's better than 0% APR on your new car? 0% APR on your next one too."
Ford and DaimlerChrysler AG's Chrysler Group will face pressure to match GM's latest interest rate deal. "We constantly assess the competition but we have nothing to announce at this time," Ford spokesman Dave Reuter said late Tuesday.
The promotion comes as GM seeks to trim vehicle inventories after fourth-quarter 2004 and first-quarter 2005 production cuts in North America. At the same time, Chevrolet, GM's biggest division, is in a pitched battle with the Ford brand to end the year as the top-selling automotive brand in the United States. The Ford brand has held the sales crown for 18 years.
Analysts credit GM with creating sales promotions that draw a lot of attention, without adding significantly to the already heavy cost of incentives. "GM is certainly coming up with a fabulous array of ways to slice up the same incentives," said David Healy, an analyst at Burnham Securities. "My guess is that not that many people will take this up."
When GM introduces a new incentive, it often raises new car and truck sticker prices or eliminates a more costly incentive, analysts say. And the automaker is not likely to take a major financial hit even if interest rates climb substantially over the next decade.
"Short-term rates may go up but medium-term rates might not," said Healy. "And GM has the resources to hedge this kind of risk in the capital market."
GM dealers, who have resisted pressure to stock more cars and trucks, welcomed the new promotion.
"It's something different that we haven't tried before," said Russ Shelton, owner of Shelton Pontiac-Buick in Rochester Hills. "It's a neat concept."
But Art Spinella, president of CNW Marketing and Research in Bandon, Ore., says surveys that his company has taken show consumers will probably give GM's offer a pass. "It's not going to have a whole lot of impact," said Spinella. "Monthly payment is the key, not interest rates."
GM's Mark LaNeve insists, however, this promotion appeals to customers' who want to make sure they keep their payment low into the future.
"Transaction prices have been very stable and if you assume they'll be stable in the future, we're locking down your payment," said LaNeve.
Dealer Russ Shelton is grateful for any new sales promotions that could trigger new business. "It's been very quiet," he said.
And some dealers feel the promotion will draw customers worried about their financial outlook. "People aren't sure where the economy is going over the next 3-4 years," said John Dimech, Internet sales manager at Gordon Chevrolet in Garden City.
"I think it will bring customers in because it gives them a sense of security about the interest rate," said dealer Frank Ursomarso, owner of Union Park Automotive, in Wilmington, Delaware, who heard details of the program from General Motors' executives today at a meeting in Naples, Florida. "Dealers like it because they get to sell that customer another car."
"If the Fed moves, it will be a wake up call for consumers that (interest rates) are not going to stay low forever."
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Under the program -- nicknamed "Lock 'n' Roll" -- qualified customers who purchase a new 2005 GM car or truck this month through the automaker's GMAC credit arm can finance an additional GM model at the same interest rate. The consecutive finance terms can cover up to 10 years. GM is dangling the first-of-its kind offer as part of a year-end sales push and timing the promotion to today's Federal Reserve Board meeting. The board is expected to raise interest rates today, a move that could make it more expensive for automakers to offer no-interest or low-interest financing deals. If interest rates remain at current levels, GM's offer will still stand.
"If the Fed moves, it will be a wake up call for consumers that (interest rates) are not going to stay low forever," said Mark LaNeve, GM North America vice president of marketing and advertising. "We're going to assume the risk."
GM is currently offering zero-percent financing on 36-month loans, 2.9 percent financing on 48-month loans and 3.9 percent on 60-month loans for eligible buyers. The second vehicle must be purchased before the expiration of the financing period on the first purchase.
The deal applies to all GM brands, including Chevrolet, Buick, GMC, Pontiac, Hummer, Saab and Saturn.
Automakers are resorting to gimmicks to drive showroom traffic now that even large cash rebates and free financing deals have lost some of their allure with customers. Last year, GM launched a 24-hour test drive program in April 2003 hoping to attract new customers who had abandoned the automaker's lineup. This past spring, GM gave away hundreds of vehicles in a promotion called "Hot Button." To participate, customers visited a GM dealership, sat in a vehicle and hit the OnStar button to find out if they won a car. Then in September, GM sparked sales by offering zero-percent interest rates for 72-month loans over a 72-hour period. Ford Motor Co. launched a competing version of the sale.
Despite the special offers and incentives averaging more that $4,200 per vehicle this year, GM's U.S. new car and truck sales rose just 0.6 percent this year. Overall industry sales are up 1.4 percent. And GM's aggressive offers have not translated into market share growth. Through October, its share of the U.S. market has slipped to 27.5 percent from 27.7 percent a year ago, according to Autodata Corp.
GM plans to launch a major advertising campaign today through print, television, Internet and radio outlets to promote the "Lock `n' Roll" deal. Print ads will ask, "What's better than 0% APR on your new car? 0% APR on your next one too."
Ford and DaimlerChrysler AG's Chrysler Group will face pressure to match GM's latest interest rate deal. "We constantly assess the competition but we have nothing to announce at this time," Ford spokesman Dave Reuter said late Tuesday.
The promotion comes as GM seeks to trim vehicle inventories after fourth-quarter 2004 and first-quarter 2005 production cuts in North America. At the same time, Chevrolet, GM's biggest division, is in a pitched battle with the Ford brand to end the year as the top-selling automotive brand in the United States. The Ford brand has held the sales crown for 18 years.
Analysts credit GM with creating sales promotions that draw a lot of attention, without adding significantly to the already heavy cost of incentives. "GM is certainly coming up with a fabulous array of ways to slice up the same incentives," said David Healy, an analyst at Burnham Securities. "My guess is that not that many people will take this up."
When GM introduces a new incentive, it often raises new car and truck sticker prices or eliminates a more costly incentive, analysts say. And the automaker is not likely to take a major financial hit even if interest rates climb substantially over the next decade.
"Short-term rates may go up but medium-term rates might not," said Healy. "And GM has the resources to hedge this kind of risk in the capital market."
GM dealers, who have resisted pressure to stock more cars and trucks, welcomed the new promotion.
"It's something different that we haven't tried before," said Russ Shelton, owner of Shelton Pontiac-Buick in Rochester Hills. "It's a neat concept."
But Art Spinella, president of CNW Marketing and Research in Bandon, Ore., says surveys that his company has taken show consumers will probably give GM's offer a pass. "It's not going to have a whole lot of impact," said Spinella. "Monthly payment is the key, not interest rates."
GM's Mark LaNeve insists, however, this promotion appeals to customers' who want to make sure they keep their payment low into the future.
"Transaction prices have been very stable and if you assume they'll be stable in the future, we're locking down your payment," said LaNeve.
Dealer Russ Shelton is grateful for any new sales promotions that could trigger new business. "It's been very quiet," he said.
And some dealers feel the promotion will draw customers worried about their financial outlook. "People aren't sure where the economy is going over the next 3-4 years," said John Dimech, Internet sales manager at Gordon Chevrolet in Garden City.
"I think it will bring customers in because it gives them a sense of security about the interest rate," said dealer Frank Ursomarso, owner of Union Park Automotive, in Wilmington, Delaware, who heard details of the program from General Motors' executives today at a meeting in Naples, Florida. "Dealers like it because they get to sell that customer another car."
"If the Fed moves, it will be a wake up call for consumers that (interest rates) are not going to stay low forever."
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