Friday, June 30, 2006

GM reverses, will again offer incentives

GM reverses, will again offer incentives
By Tom Krisher
Associated Press

DETROIT — It took General Motors Corp. exactly six months to start cheating on its incentives diet.

GM said in January it was lowering sticker prices on three-quarters of its U.S. vehicles, a move designed to allow the automaker to rely less on costly incentives to sell its vehicles and to take aim at competitors that have been sapping market share.

But on Tuesday, as the automaker predicted slower U.S. sales overall this year, it said it will briefly bring back some incentives to clear inventory as the 2007 model year approaches.

GM will offer zero percent financing for up to six years on most Chevrolet, Buick, Pontiac and GMC models during a sale that begins Thursday and ends July 5.

The automaker also said its June sales likely will be 30 percent lower than the same month last year, when the company was offering an employee-discount promotion.

Those records won't be topped, so sales this year are likely to drop a bit from 2005, said Paul Ballew, GM's executive director of global market and industry analysis. Higher interest rates and fuel prices also will keep sales lower than last year, he said.

GM officials said Tuesday they have no plan to return to employee pricing, even though such a program is under consideration by DaimlerChrysler AG's Chrysler Group. A Chrysler spokesman said no decision has been made on incentives but an announcement would likely be made Friday, when current incentives expire.

GM said it expects to average $2,836 in incentives per vehicle this June, $1,100 less than the same month last year. It also expects sales to increase over May figures when they are released Monday.

Analysts said GM's strategy will bring people into showrooms and boost sales and perhaps market share.

"Just having this 72-zero gimmick means they're having a hard time doing that," said David Healy, an analyst with Burnham Securities Inc.

Ford already has zero percent financing for five years, Healy said, but GM is raising the stakes and cost by going to six years.


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