Some Dealers Skeptical About Campaign : Auto Sales Incentives Under Way--Again
With hefty rebates and interest rates as low as 1.9%, the Big Three U.S. auto makers began expensive campaigns this week to lure customers back into showrooms and reduce swollen inventories.
As Chrysler and Ford joined General Motors in offering the new incentive programs, Southern California auto dealers said Friday they are skeptical the move will boost sales sharply.
Detroit auto makers have plied buyers with a variety of incentives over the last year, they say, so buyers may prove somewhat apathetic to larger rebates and annual interest rates lowered still further on two-year new car loans, from 3.9% to 1.9%.
“There’s just no magic there no more--it just doesn’t stimulate people anymore,” said Ken Harmon, general manager and part owner of Jerry Harmon Buick in Los Angeles.
“The incentives have been in place all year,” said Joe Voltarel, general manager of Eddie Hopper Chevrolet in Garden Grove.
Dealers predicted that this weekend will provide the first test in the latest financing frenzy, which became more furious Friday as Chrysler moved to match incentive programs. General Motors triggered the struggle Wednesday. Ford followed on Thursday.
Showroom Traffic Already Up
Some dealers predicted crowded showrooms this weekend, arguing that weak car sales so far this year are the result of consumers holding out for August discounts. “People were waiting for whatever the big thing would be . . . this is the program they’ve been waiting for, it’s not going to get any better than this,” said Mike Greene, general manager and part-owner of Harris Oldsmobile and GMC Trucks in Whittier.
Wessen Buick in Los Angeles sold five cars on Thursday, the first day of GM’s new incentive program, general manager John Beasley said. Normally the dealership only sells one or two cars a day on weekdays. “It’s almost like a 75% increase in showroom traffic,” he said.
General Motors announced Wednesday that it would give consumers a choice between low interest rate financing--including 4.8% for four-year loans--and factory rebates ranging from $200 for a Pontiac LeMans to $1,000 for a Buick Electra. Ford and Chrysler’s terms are similar.
General Motors and Ford both set Sept. 30 as the closing date for their programs. Chrysler did not release such a date.
The new 4.8% rate on four-year loans is the most important incentive, said Chris Cedergren, an analyst for J.D. Power and Associates, an automotive industry research firm. “Who can afford to pay for a car in two years?” he asked, later adding that “the interest rate itself now is not much of an inducement to get the buyer into the market.”
General Motors has not had a nationwide four-year rate since last year’s highly successful incentive program, which ran from Aug. 28 to Oct. 8. The lowest four-year rate at Bob Longre Pontiac before Wednesday was 9.9%, which meant monthly payments of $253 on a $10,000 loan. The new rate means monthly payments of $229.
Even an otherwise optimistic Greene of Whittier warned against exaggerating the boost to sales that lower interest rates could provide.
“Last year it was so different. Nothing like this had been offered (before) and people really stormed into the showroom.”
