GM's Lutz Defends Cheap Financing Offers

FRANKFURT -September 17, 2002 Dow Jones is reporting that Robert Lutz, vice chairman and head of product development at General Motors Corp., says the car maker can continue to offer 0%-interest financing without threatening earnings, according to an advance copy of German newspaper Sueddeutsche Zeitung.

Lutz defends such offers, which help bolster auto sales, the newspaper reports in an interview to be published Wednesday.

Interest rates are low at present, and low financing deals are still cheaper than discounts, Lutz says.

Moreover, only 20% to 22% of customers actually buy under these conditions, he says.

Lutz criticizes the strategy of rival Chrysler Group - a unit of DaimlerChrysler - to offer multi-year guarantees instead. Those are more expensive than 0%-interest financing, and only necessary if the reputation for quality is bad, says Lutz, a former Chrysler executive.

"With quality as it is at Chrysler today, I wonder why they did that," Lutz says