Prices for 2004 cars slashed from start
By Andrea Coombes
CBS MarketWatch
SAN FRANCISCO — U.S. carmakers are so stuck in the quicksand of endless incentives, with their customers conditioned to expect the perk, that some 2004 models are being discounted even as they hit dealers' lots.
Chevrolet is offering a $3,000 rebate on its 2004 Cavalier, the Chrysler Sebring comes with a $2,000 rebate, and the Ford Escape carries a $1,500 rebate, according to Automotive News, a trade journal.
While the Big Three domestic makers — General Motors, Ford and DaimlerChrysler — tend to dominate in offering incentives across their fleets, foreign carmakers are also adopting price-cutting measures.
"This market is merciless," said Paul Taylor, chief economist with the National Association of Automotive Dealers. "Everybody has to be competitive in this world of very rough-and-tumble competition."
Indeed, Kia Motors is offering $1,500 off or zero percent financing on its 2004 Optima, and the Mazda Tribute comes with a $1,500 rebate.
But in an effort to protect models' credibility and brand image from damage, some discounts aren't being advertised.
"You really don't want to start offering big customer incentives right away, because it makes it look as if the vehicles aren't popular," said Art Spinella, president of CNW Marketing, an auto-industry research firm in Bandon, Ore.
"It's a little earlier than usual for a new model year to be getting substantial incentives, but we're seeing a lot of them, especially of the unseen variety."
For instance, Mercedes-Benz is offering a $2,000 manufacturer-to-dealer incentive on its 2004 C-class wagon, and the Cadillac Seville is going to dealers at a $3,000 discount, according to Automotive News.
With 2004 models already being discounted, dealers are offering even better rebates on 2003s.
The Big Three U.S. manufacturers spent a record amount on consumer incentives in August: $3,687 on average per car, up from $2,782 in August a year ago, according to Edmunds.com, a consumer automotive information site.
