GM sees sales drop, will offer incentives

Zero percent financing will be offered for a week.
DETROIT (AP) -- General Motors Corp. predicted Tuesday that U.S. sales overall will decline this year and 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 announced last June that it would let customers pay the employee price for vehicles, and it was followed in July by Ford and Chrysler, pushing sales to record numbers.
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.
Plunging market share
GM's U.S. market share has fallen from 32 percent a decade ago to less than 25 percent, while Asian competitors such as Honda Motor Co. and Toyota Motor Corp. have made gains.
The Big Three U.S. automakers saw their combined U.S. market share fall to 56 percent in the first quarter of this year, down from 58 percent the year before. Toyota and Honda had a combined share of 22 percent for the quarter, up from 21 percent the year before.
GM also said Tuesday its June sales likely will be 30 percent lower than the same month last year, because at that time, the company was offering an employee-discount promotion.
But GM officials said 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, the day the company's current incentives expire.
The employee pricing, which amounts to a 5 percent discount, would not work as well as last year and is not popular with dealers, said Mark LaNeve, GM's vice president of vehicle sales for North America.
"We're not planning on reviving employee pricing," LaNeve told reporters Tuesday.
Moving away from plans
It also would contradict GM's strategy of trying to wean itself of incentives and rental-car sales and increase its average sales price, he said.
"We don't want to go to market that way," he said, adding that GM is trying to improve its brand image so that it is known for selling great products rather than great incentives.
"We're confident we've got the right strategy, and we're going to continue down this path," he said.
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.
Chrysler, LaNeve said, has a huge inventory and already is offering big incentives, sometimes as much as $6,000 per vehicle. Employee pricing could actually be a worse deal than some of the company's existing incentives, he said.
Zero percent financing
GM will offer zero percent financing for 72 months on all Chevrolet, Buick, Pontiac and GMC models except for the Chevrolet Corvette, Hummer H1, medium-duty trucks and the Pontiac Solstice and the G6 convertible, company spokesman John M. McDonald said.
In addition, GM will offer interest-free loans for up to five years on 2006 Cadillac, Saab and Hummer models. Zero percent also will be available for 36 months on some 2007 SUVs, including the Chevrolet Tahoe, Suburban and Avalanche and the GMC Yukon and Yukon XL. Those models were introduced earlier this year.
Analysts said GM's strategy will bring people into showrooms and boost sales and perhaps market share.
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