GM to drop zero-percent financing, raises incentives on new models

August 26, 2002

DETROIT Reuters is reporting that General Motors Corp. has quietly ratcheted up incentives on its new 2003 models as it prepares to end its zero-percent financing offer on its dwindling supply of 2002 models, dealers said on Friday.

Earlier this week, the world's largest automaker began offering up to $750 towards the lease of a new 2003 model year GM car or truck in some parts of the United States, dealers said.

"That's a huge incentive," said Tim Burnett, the sales manager of Hank Graff Chevrolet of Davison, Michigan. "GM pretty much picked up where they left off from the 2002s (models) to the 2003s."

The new incentive program, which expires on Oct. 31, offers $500 towards the lease of a GM car or truck to any current owner of a GM vehicle, dealers said. The incentive rises to $750 if the current owner buys the same GM brand, for example, a Chevrolet owner buys another Chevrolet, dealers said. GM's Saturn, Saab and Hummer brands are excluded from the program.

A GM spokeswoman said the program is only available in certain regions of the United States and declined to discuss it further.

GM's zero percent financing program is due to expire on Sept. 3 and GM will not continue that program due to falling inventories of 2002 models, dealers said.

"They're not going to have the zero percent," said Lou LaRiche, owner of Lou LaRiche Chevrolet in Plymouth, Michigan.

Automakers traditionally add incentives on models in the summer to clear dealerships before they ship new model year cars and trucks. The new models usually have low or no incentives, but customers have grown used to the deals and automakers are aggressively fighting for market share, dealers said.

GM, the most aggressive of the U.S. automakers and the first to offer zero percent financing last fall, began offering $1,000 cash back on the purchase of a new 2003 model earlier this month. Ford Motor Co. and DaimlerChrysler AG's Chrysler arm followed with similar incentives on 2003 models.