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GM’s new incentives

Bob Moon Jun 28, 2006
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GM’s new incentives

Bob Moon Jun 28, 2006
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TEXT OF STORY

SCOTT JAGOW: There’s never been a worse time to buy that new gas-guzzling vehicle. Gas prices plus interest rates? Bad equation. For example, GM has a lot of those bigger cars and trucks and SUVs and it’s having trouble moving them. The automaker’s sales could be even worse than last year. So this weekend GM is telling people it’s never been a better time to buy a car. Here’s Bob Moon.


BOB MOON: Luring customers into the showroom is proving to be a chronic challenge for American carmakers.

[ Commercial: “Get zero percent APR financing for 60 monthsa€¦” ]

Try as they might, they still can’t seem to shake the habit of costly incentives.

[ Commercial: “. . . $179 a month with zero due at signinga€¦” ]

Now General Motors is blaming weaker-than-expected sales for its return to zero-percent financing offers on many of its models. GM executives insist it’s only a quick fix — just for the upcoming holiday weekend — but it could be keeping would-be buyers hooked on the habit.

At Washington University in St. Louis, business professor Lyda Bigelow says customers have come to expect these deals:

LYDA BIGELOW: “And they hold off purchases in the hope that, eventually, manufacturers will, indeed, provide these incentives. That’s been a pretty useful working assumption over the past couple of years.”

Bigelow says for now, GM needs to keep the cash flowing while it improves its product lines. A GM executive stressed that point during a conference call with reporters, vowing that the company can’t, and won’t, be dependent on deep incentives.

In New York, I’m Bob Moon for Marketplace.

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