GM, Ford add dealer incentives to SUVs

DETROIT, Feb 7, 2003; Michael Ellis writing for Reuters reported that General Motors Corp., seeking to boost sales of sport utility vehicles after poor results last month, is offering U.S. dealers as much as $1,000 on each one they sell if they match last year's results, dealers familiar with the plans said on Friday.

Highlighting the competitiveness of Detroit's price wars, Ford Motor Co. responded late on Friday, saying it would offer a similar program on two of its high-volume SUVs.

Sales of many of GM's most profitable SUVs, including the Cadillac Escalade, Chevrolet Suburban and GMC Yukon XL, fell more than 30 percent in January due to new offerings from competitors and buyer fatigue from GM's all-out sales push in December.

The deal, which runs through the end of February, also includes the Cadillac Escalade ESV, a new large SUV that went on sale last month, and the Cadillac Escalade EXT, a luxury pickup truck.

GM, the world's largest automaker, will offer its U.S. dealers $500 on each mid- and full-size SUV they sell if they hit 75 percent of last February's sales figures, and $1,000 on each sale if they reach 100 percent, said dealers, who asked not be named because dealer incentives are generally not made public. The cash is given for each vehicle they sell over the sales targets, dealers said.

In an attempt to sell more vehicles in the first half of the month, all of the SUV sales between now and Feb. 12 will be doubled when applied to the sales targets, they said. Dealers are free to use the cash as they wish, offering it customers or keeping it for profits.

"We immediately thought of a customer that was just on the fence, and now were able to offer them a deal," one Wisconsin dealer said.

GM declined to comment on the incentives.

Ford spokesman Jim Cain said Ford would offer dealers rewards of $500 to $1,000 per vehicle on its Ford Explorer and Ford Expedition SUV sales for the remainder of this month, based on sales targets. Ford was the only member of Detroit's Big Three to increase sales and market share in January.

"We're going to do what it takes to remain competitive," Cain said. "We're not interested in ceding share."

One Los Angeles dealer said the GM incentives should help boost sales, but a return of zero percent financing on five-year loans would help more. "If GM put zero percent for 60 months back on the SUVs, it would be insane around here," he said.

GM's strong SUV sales have powered its two consecutive years of higher market share and stronger earnings, which have grown thanks to cost-cutting initiatives despite the high costs of its aggressive incentives.

But last month, GM's sales of SUVs, pickup trucks and minivans fell nearly 19 percent, partly due to exceptionally strong sales in December. GM's supplies of unsold trucks soared last month to more than 100 days' supply,

Meanwhile, many of its competitors have come out with new SUVs in the last few months, such as the Lincoln Navigator and Aviator, the Volvo XC90 and the Expedition from Ford, and the Lexus GX470 from Toyota Motor Corp. (Tokyo:7203.T - News).

Nissan Motor Co. Ltd. will enter the market for full-size SUVs for the first time later this year, and has just begun selling its Infiniti FX45 luxury SUV.

Late last month, GM and Ford added $500 in consumer cash rebates to many of their SUVs, pickup trucks and vans.