GM Extends Incentives

April 3, 2002 BLOOMBERG NEWS is reporting that General Motors Corp., the world's largest automaker, extended incentives to buoy sales and increased second-quarter production 3.9 percent.

The company is offering cash back or no-interest loans on most models until April 30. General Motors offers $2,002 cash through July on some large and luxury sedans such as the Pontiac Bonneville and Buick LeSabre, spokesman Jeff Roegner said. It raised second-quarter output to 1.48 million from 1.43 million.

General Motors, Ford Motor Co. and DaimlerChrysler AG's Chrysler unit are extending incentives after March sales fell as rental companies reduced fleet purchases. U.S.-based automakers introduced zero-percent financing last year to revive sales after the Sept. 11 terrorist attacks, and the lower demand in March showed that discounts are drawing fewer buyers.

"I don't know how they're going to shake consumers out of" expecting discounts, said Wes Brown, an analyst for Thousand Oaks, California-based Nextrend, which analyzes auto sales.

General Motors stock rose 28 cents to $59.98, while Ford slid 36 cents to $15.37. DaimlerChrysler fell 37 cents to $44.80.

Ford extended an offer last month of cash rebates or no-interest financing through April 8. The second-largest automaker is offering "loyalty bonuses," giving cash to customers who return a leased vehicle if they lease a new model. The bonuses include $1,000 for a returned car and $1,500 on a returned truck.

Chrysler last week extended until May 31 a 7-year, 100,000-mile engine warranty offer on new cars and trucks and may make it permanent. Chrysler also extended an offer of as much as $2,500 cash back on certain models last week. The third-largest automaker in the U.S. said sales declined 4 percent last month as rental fleets ordered fewer vehicles.

Inventories at Chrysler ended March at a 59 days supply. That "may be a little low," prompting the automaker to increase output this quarter, Gary Dilts, Chrysler senior vice president of sales, said on a conference call with analysts and investors.

General Motors increased cash back to customers to $2,002 on its Chevrolet Tahoe, Suburban and GMC Yukon and Yukon XL sport-utility vehicles from $1,500 last month.