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In what's shaping up to be another round of summer incentive wars, General Motors Corp. is planning to roll out a zero-percent, 6-year financing program for most 2006 models as soon as next week, according to dealers and industry sources.
GM has been diligently holding down its incentives, cutting them by more than 30% from 2005. But in the process, it has been losing market share. Such a program would appear to be a capitulation to hefty discounts offered by other Detroit-area automakers.
The possible program comes on the heels of Chrysler Group executives confirming Thursday that they plan to launch a new incentive program around July 1. Chrysler Group executives would not detail the program but said they were considering employee pricing, in which customers get the same prices as company workers.
Earlier this month, Ford Motor Co. launched a program to provide no-interest loans and $1,000 gas cards to buyers of most 2006 Ford-brand vehicles.
The new round of discounts is on the way as GM, Ford and the Chrysler Group try to keep sales from sliding, particularly in their SUV lineup, and clear out inventories of 2006 models, analysts said.
"It's clear that General Motors, Ford and Chrysler have to do something," said Mark McCready, director of pricing strategy and market analysis for CarsDirect.com, a Los Angeles-based car-buying and research site.
Automakers have rolled out a host of incentive programs in the past five years, starting in late 2001 with GM's "Keep America Rolling" no-interest-loan program. Last summer, the incentive of choice became employee pricing. GM started its program first but was followed closely by Ford and the Chrysler Group.
The programs helped pump up sales, but some analysts criticized the incentives for eating into profits, pulling ahead sales and creating an environment in which customers expect major discounts.
GM would not confirm whether it would be offering a zero-percent, 72-month program, but several dealers and industry sources said they expected the program to be announced next week.
Chrysler Group Chief Executive Officer Tom LaSorda said Thursday at a news media event in Chelsea that the Chrysler Group is mulling options for an incentive program that would be announced June 30 or July 1. Employee pricing is an option, but plans have not been finalized, he said.
The Chrysler Group is looking at the impact of last year's employee-price incentive, he said. Sales dropped in the fall, after automakers stopped employee pricing, but the Chrysler Group still made a $1.8-billion operating profit, unlike GM and Ford, where North America operations lost money.
http://www.freep.com/apps/pbcs.dll/article?AID=2006606230362
