Ford, DaimlerChrysler add incentives on small SUVs

April 8, 2002

BLOOMBERG NEWS is reporting that Ford Motor Co. and DaimlerChrysler AG, the No. 2 and No. 3 automakers in the U.S., added discounts on small sport-utility vehicles as rivals cut into sales of the Ford Escape and Jeep Liberty.

Ford is offering $500 rebates nationally on Escape, and dealers where competition is most keen may bump that to $1,000, said spokeswoman Susan Krusel. DaimlerChrysler added $1,000 incentives on leases for Liberty in the Northeast U.S. including New York, Philadelphia and Boston, spokesman Marc Henretta said.

The market for small sport-utilities has become more competitive with the entry of the Liberty, Hyundai Motor Co.'s Sante Fe, and a redesigned model from Honda Motor Co. Ford's Escape sales dropped 28 percent to 29,964 in the first quarter, while sales rose 64 percent for both Honda's CR-V, to 39,053, and Hyundai's Santa Fe, to 17,870.

"Hyundai has one-sixth or one-seventh of the dealers Ford has but they're selling half as many (small sport-utilities) as Ford sells," said Jim Gillette, vice president of Grand Rapids, Michigan-based IRN Inc., a consultant to auto suppliers.

Detroit-based General Motors Corp., the largest automaker, this week extended its offer of $2,002 cash back or no-interest loans on most models through April 30. Dearborn, Michigan-based Ford is extending its program of zero-percent financing or $2,500 customer cash on most cars and trucks through May 1.

Ford also is adjusting a program for lease customers, she said. The company now offers as much as $1,500 to lease customers who take a new vehicle when they return their current car or truck. Effective Tuesday and running through July 1, some of the truck models are being reduced to $1,000 and cars are being reduced to $500 from $1,000.

Chrysler sold 34,880 units of the Jeep Liberty, which went on sale in May, during the first quarter. Spokesman Henretta said no regions other than the Northeast are currently offering the Liberty lease discount and that there are no rebates or lower interest payments available.

Chrysler dealers in other regions are watching the Liberty incentives in the Northeast as sales start to slow, said dealer Jerry Bowman, who runs the Stuart-Bowman Auto Center in Asheboro, North Carolina. Liberty sales have slowed at his dealership from about 10 per month last year to about six per month now, he said.

"It's starting to slow down, but we don't want to do to much because we're still selling Liberty at its real value," Bowman said. "It's not the kind of vehicle that needs to be sold like distressed goods."

Ford fell 9 cents to $15.05. The U.S. shares of Stuttgart, Germany-based DaimlerChrysler rose 43 cents to $44.70, while General Motors declined 13 cents to $60.01.

Sales of Honda's CR-V have risen to record levels since the fifth-biggest automaker in the U.S. introduced a redesigned version in November. The company currently has less than a 10-day supply of CR-V and doesn't offer any incentives, spokesman Art Garner said.

Availability should improve later this year when Honda starts building CR-Vs for export to the U.S. at its factory in Swindon, England, Garner said.

Demand is so high for Honda CR-Vs at Frank Ursomarso's Union Park Automotive Group dealerships in Wilmington, Delaware, that he said he sold the demonstration model his wife had been driving this week.

"The success of Honda right now is beyond comprehension," said Ursomarso, who has sold Hondas since 1975 as well as Fords and other auto brands. "We sell out of them as soon as we get them."

While Ursomarso also said he hasn't much trouble selling Ford Escapes, he said he plans to advertise them more aggressively because he has some in stock that weren't selling as quickly.

BY BILL KOENIG