GM Prolongs US Auto Incentives War with Extended Offers

10 July 2003

America’s ‘big three’ auto giants look set to continue their costly incentives war after General Motors extended its offers.

GM announced that cash rebates of up to $4,000 (€3,521; £2,449) and five-year interest-free finance deals will continue until July 31. Although some rebates have been cut by $1,000, other discounts have been introduced on several 2004 models in what John Smith – GM’s head of North American sales, marketing and service – calls the “annual summer selldown”.

Ford Motor Company – whose incentives expire this week – must decide whether to match GM’s move, while DaimlerChrysler’s offers run to the end of the month anyway.

GM has been the leader in the incentives war, launched after September 11 2001 to maintain sales. Although Detroit executives have acknowledged the battle is eroding profits, nobody seems willing to scale back until they see concrete signs the economy is on the mend.

But there are now fears that incentives are no longer enticing customers to showrooms. For June, GM’s average incentive per car was worth $3,934, around 51% higher than in the same month last year. However, inventories remained 21% above normal.

GM sales last month rose 1.2%. DaimlerChrysler was up 6.3%, while Ford sank 1.2%. Asian automakers fared better, with rises for Nissan (+21.5%), Mitsubishi (+9.6%), Toyota (+10.9%) and Honda (+8.7%).

Data sourced from: USA Today; additional content by WARC staff