GM's Opel Offers Cheap Financing Amid Harsh Competition

RUESSELSHEIM,October 23, 2002; Beth Demain Reigber wrting for Dow Jones reported that General Motors Corp.'s German affiliate Adam Opel AG Wednesday said it has bowed to competitive pressure and, like some rivals, has expanded a cheap-financing sales incentive.

Starting this month, Opel is offering 0.9%-interest financing on all models if the customer makes a downpayment of at least 20% of the purchase price. That goes even for the new Vectra passenger car.

Or, buyers may choose a voucher for EUR950 worth of fuel, which should cover about 900 liters of gas or 1,000 liters of diesel fuel, the carmaker said in a press release.

"To stay competitive, we have to think of such programs," said Opel spokeswoman Gudrun Langer.

To combat falling auto sales and sharp competition, auto makers in Europe hope special deals can lure buyers to showrooms. Volkswagen AG this year has offered 0.9%-interest financing. Ford Motor Co. went even lower, with a 0.75%-interest deal on its new Fiesta.

With Opel's market share in western Europe down 14% so far this year, it especially is under pressure to reverse declining sales.

U.S. car companies have long been relying on such incentives to buoy sales, but analysts warn these can erode profit margins and brand image.

DaimlerChrysler AG's Chrysler Group President Dieter Zetsche has called these offers a "drug": once customers get a taste of the discounts and carmakers get higher sales, it is hard to withdraw the deals.

Opel previously had given this deal only on the Astra and Corsa models. The offer expires Dec. 31, Opel said. The carmaker has other offers for those who don't want to make the downpayment.

Company Web site: http://www.opel.com