Auto incentives are back
DETROIT — As he checked out the sticker on a new Chrysler 300, Johnny Speight wasn’t sure what incentives the company was offering or whether he’d even buy a new car for his wife.
All he knew was that he would not pay anywhere near the $28,500 asking price.
Speight, 26, a real estate agent from the Detroit suburb of Westland, said he always shops for cars in the summer and fall. Then, like many consumers, he knows the auto companies will offer special deals as the model year changes.
Auto companies, especially the domestic Big Three, are hoping that more Speights are out there as they once again pitch special offers to boost sagging sales and move their growing inventory before 2007 models arrive.
Indeed, on Friday, the day after Speight visited a dealership in Dearborn, DaimlerChrysler AG announced employee discounts of 10 percent for everyone and three-year, zero percent financing on most of its 2006 models.
“Anytime there’s a manufacturer’s war for market share, the benefit goes to the consumer,” said Ron Marhofer, owner of a large Chevrolet dealer and six other car lots in the Akron and Canton, Ohio, areas. “There’s an overpopulation of cars, and the manufacturers are trying to grab market share, and they’re doing substantial incentives to grab the business,” he said.
General Motors Corp. and Ford Motor Co. said they would not follow Chrysler’s moves Friday. But earlier in the week, GM announced zero percent financing for up to six years on most of its cars and trucks. Ford already had zero percent financing for up to five years on most models.
All three have put deadlines on the offers. GM’s expires first, on Wednesday. Ford’s financing offer runs through July 31, as does Chrysler’s employee pricing.
GM, Chrysler and Ford executives all have recently stated a desire to wean themselves of incentives and bring prices closer to the stickers, selling their products instead of prices. But analysts say they may not have the discipline to give up the sales and market share.
Joe Eberhardt, Chrysler’s vice president for global sales, marketing and service, said selling solely on product is difficult in the current market.
“Just a good deal or just a good product is today no longer good enough. That’s why we brought everything together,” Eberhardt said.
The incentives come just before June sales figures are announced Monday, with industry analysts predicting that North American sales will drop 8 to 12 percent compared from June 2005.
Forecasts predict DaimlerChrysler’s June sales will be down 6 to 9 percent compared to last June, while Ford sales will be flat to more than 5 percent down. GM, which had a booming June last year when it offered employee pricing for everyone, is expected to see sales drop anywhere from 30 to 36 percent, according to analysts.
Japanese sales are likely to increase in June by about 7 percent, said Jesse Toprak, executive director of industry analysis for Edmunds.com, a vehicle information service.
Dealers say the incentives boost summer sales but make them pay with slow sales later in the year.