AUTOMOBILES GM's latest selling incentive draws little interest by unconvinced buyers
Carmaker looks to tried and true no-interest loan to clear out growing inventory.
By Sarah A. Webster
KNIGHT RIDDER NEWSPAPERS
DETROIT -- General Motors Corp.'s Lock ' n' Roll incentive program was a hook many consumers left dangling in the market without a bite this month, dealerships and auto analysts reported.
The automaker's creative incentive program allowed consumers to lock in a low interest rate on a new 2005 GM vehicle and a future vehicle for up to 10 years. The deal was designed to increase showroom traffic and improve sales. But with a few days left to close out the month, dealers were reporting that the response to the program has been lukewarm.
Back to basics
That may have contributed to GM's decision to begin offering 0-percent interest rates on 72-month loans for 2004 vehicles in the middle of the month. GM pitched essentially the same offer in a 72-hour sale at the end of September to clear out 2004 inventory. Dealers said that sale was a slam-dunk. It drew droves of potential buyers into showrooms and caused new vehicle sales to surge to 1.4 million vehicles in September.
Chris Hemmersmeier , executive general manager of Jerry Seiner Dealerships in Salt Lake City said the Lock 'n' Roll program has been difficult to market to consumers, even though he believes it offers an important value.
"Lock 'n' Roll has been OK but not as good as we anticipated," Hemmersmeier said.
David Healy, an auto analyst with Burnham Investment Research , agreed. "The average car buyer has difficulty seeing through the middle of next week," he said. "Who knows if I'm going to buy another GM car in three to seven years anyway?"
In fact, Casesa and Healy expect sales to decline for the world's largest automaker in November, probably about 5 percent or so, compared to a year ago -- largely because GM's performance last November was so strong. A sales decline will likely translate into a market share loss for GM.
Stagnant sales
Consequently, both analysts expect industrywide sales in November to be about the same as a year ago, when automakers sold about 1.3 million new cars and trucks in the United States.
Healy expects sales for Ford Motor Co. and DaimlerChrysler AG 's Chrysler Group to be up slightly, largely on the strength of their new models. Ford unveiled the Five Hundred sedan and Freestyle crossover recently, while Chrysler is still riding on the strength of its hit 300 sedan.
With lackluster November sales expected, Casesa also thinks the month will end with inventories about 13 percent above normal historic levels.