Tuesday, September 14, 2004

GM beefs up already fat incentive offers

More on incentives:
The world's largest automaker already offers no-interest financing on loans of up to 60 months for most cars and trucks, or a variety of cash-back and bonus deals. But now the automaker, saddled with about 1.15 million cars and trucks in stock at the end of August, has enhanced the deals.

Rebates for 2005 vehicles now range from $500 to $3,500 on most models, excluding the Cadillac brand. Bonus cash offers for customers financing through GMAC now range from $500 to $1,500 per vehicle. Zero-percent financing is also available on a few 2005 models. Meanwhile, deals on several 2004 models also have been enhanced.

Some dealers said buyers could now negotiate for as much as $7,000 off some large SUVs with the incentives.

The consumers should think about this a little. How does GM afford to offer up to 7000 dollars in incentives? Is this because the SUVs are typically marked up any where between 5000 to 12000?
many of these consumers locked themselves into longer-term loans. The length of loan terms has been growing from 36 months or 48 months to between 60 months and 72 months, meaning many consumers won't be in the market for a new vehicle for a while longer. As a result, some dealers report that most shoppers today have little to no equity in their trade-ins.

Today, only 16 percent of the people who buy a new vehicle say it is because their old one needed to be replaced, reports CNW Marketing Research ofin Bandon, Ore. In 1990, about 61 percent of consumers said they needed to replace their old vehicle.

Worse yet, many industry watchers have started to worry that the incentive game is training consumers to wait for a better deal, which is -- inevitably -- around the corner.
Incentives, Can't live with them, Can't live without them!

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