Car Maker offers new incentives to lease vehicles

DETROIT, Feb 7, 2004; Michael Ellis writing for Reuters reported that General Motors Corp. added new incentives on Saturday to lease vehicles, its first major marketing program following January's poor U.S. sales results.

GM, the world's largest automaker, said that under the new offer, qualified lessees are eligible for a 48-month lease with no down payment, no security deposit, no first month's payment and nothing due at the signing of the lease other than tax, title and registration.

Most GM cars and light trucks are included in the program, which runs from Feb. 7 through March 31 and will be advertised nationally beginning on Sunday.

Some of the vehicles excluded from the program include the Hummer H1 sport utility vehicle, the Cadillac CTS-V sport sedan, some Oldsmobiles and vans, and selected models of the Chevrolet Cavalier and Pontiac Sunfire small car line.

Company officials said last month that the mantra inside GM is "Fast Start in '04," but on Tuesday, the automaker reported a surprisingly weak drop of 2 percent in U.S. sales. High inventories of unsold vehicles led many analysts to conclude that the automaker would add more incentives.

GM officials have confidently predicted that the automaker would gain market share this year, helped by a number of new vehicles that will roll out later, including the Chevrolet Equinox SUV and the Chevrolet Corvette sports car.

But in January, GM's U.S. market share slipped to 26.3 percent from 28 percent for all of 2003.

With the U.S. economy in recovery, and automakers shipping an estimated 48 new models to dealerships this year, some U.S. auto executives talked of hopefully cutting sales incentives this year. The industry has also quietly raised vehicle prices to offset the costs of the incentives.

But the latest offers suggest that the industry will face difficulty scaling back the offers.

"I think they would love to cut them in half, I don't think they'll be able to do that," Mike Jackson, the chief executive officer of the car dealership group AutoNation Inc. told analysts and reporters on a conference call on Thursday.

GM has also offered other incentives recently to boost sales, including a "combination" program offering buyers interest-free financing for loans of up to 48 months and cash rebates of up to $2,000 on select models in some regions of the country, some GM dealers said. A GM spokeswoman confirmed the program without offering specific details.

"That's the first time they've done that in a while," the owner of a Chevrolet-Buick dealership in Texas said.

The automaker also sent employees coupons to use or give to friends offering thousands of dollars off the price of a new vehicle. The "GM in the Driveway" program runs through the end of March.