GM considering new incentives on leased vehicles

DETROIT, Feb 27 Reuters reported that General Motors whose $2,002 cash incentives on most of its new cars and trucks expire on Thursday, is considering offering customers an incentive to cut short their current leases and buy or lease a new GM vehicle. However, the world's largest automaker is not considering matching the seven-year/70,000 mile warranty on engines and transmissions offered by rival DaimlerChrysler AG's Chrysler brands, said Bill Lovejoy, group vice president of GM's North America vehicle sales, service and marketing.

With vehicle sales falling from record levels in 2000, automakers ratcheted up consumer incentives, particularly after the Sept. 11 attacks. GM led the industry with its zero-percent financing offer, which caused a one-month surge in sales in October to record levels.

GM also instituted a ``lease pull ahead'' program last June, which allowed owners to waive the payments on the remaining months of the lease on their GM vehicle if they bought or leased a new GM car or truck. The Saab, Saturn and Hummer brands were excluded from that program.

Lovejoy said the program distributed more evenly the number of vehicles returning from expired leases and was especially helpful when sales came to a near halt for a few short weeks after Sept. 11.

``We did it so we could soften the bubble,'' he told reporters at a press conference for GM's Hummer brand.

GM officials said they will announce their new incentives on Friday, the same day the industry reports U.S. vehicle sales for February. Analysts generally expect sales to fall to somewhere in the range of January's 15.8 million seasonally-adjusted annual rate, down from a strong 17.5 million rate in February last year. Some analysts are more pessimistic, expecting sales around 15.3 million, the weakest rate in nearly 3-1/2 years.

Lovejoy said the costs of matching Chrysler's extended engine and transmission warranty across the vehicle lineup would cost it about $700 per vehicle. When GM offered consumers the extended warranty or cash, about 98 percent took the cash.

``We just don't understand why Chrysler is doing what it's doing,'' Lovejoy said. ``We don't see where it's working.''

GM would only consider adding an extended warranty on the engine and transmission on select vehicles where ``we can take a shot across the bow (of a competitor) and hurt somebody very bad,'' Lovejoy said.