WSJ Says: GM to Unveil New Cash Rebates

NEW YORK Reuters reported that The world's largest automaker General Motors is expected to unveil a new sales drive that will include cash rebates, in what could become a new battle to boost sales, The Wall Street Journal reported on Thursday.

The new marketing campaign is expected to offer $2,002 rebates on new models, according to people familiar with the matter, the newspaper said in its online edition.

The new plan is a sign that automakers will still need to cut prices to boost 2002 sales, it said. The company is expected to offer the discounts across most of its lines, but it was not clear how long the initiative will run, the paper said.

The program would replace the interest-free loan plan initiated in the wake of the Sept. 11 attacks.

GM's zero-percent program, which expired on Wednesday, jump-started demand and was matched by rivals Ford Motor Co. and the Chrysler side of DaimlerChrysler AG

The programs pushed the average incentive offered on new vehicles up by 71 percent in October from the same month in 2000, to nearly $2,300 per vehicle. The move set the stage for more of the same in 2002, including an ongoing price or incentives war.

GM's move is recognition that without large discounts, sales of many Big Three models will probably plunge under the weight of the sluggish economy and intense competition from Japanese, Korean and European rivals, The Wall Street Journal said.

While GM is has benefited from new truck and sport utility vehicles it rolled out this year, it seen losing money if annual U.S. light vehicles sales dip below the low end of expectations of about 15 million units.

The outlook for Ford and Chrysler is not as good, however. as they undergo broad restructuring programs that have cut or delayed new product development and led to widespread layoffs.

Automakers are scheduled to report December sales Thursday.