GM boosts incentives amid declining sales

By John Porretto
Associated Press

DETROIT — General Motors Corp., coming off a third straight month of declining sales, added $500 to $1,000 in cash incentives on most 2005 model vehicles yesterday, as the world's largest automaker tries to spark a late-year rally.

GM's cash rebates on most 2005 models now range between $500 and $3,500, spokeswoman Deborah Silverman said, including $1,500 on most full-size pickups and sport utility vehicles.

Financing a vehicle through the company's finance arm, General Motors Acceptance Corp., can get the customer another $500 to $1,500 in "bonus cash." The amount varies by region.

The new deals are good through Sept. 30.

"The program is not dramatically different from last month," Silverman said.

GM still is offering cash rebates of $5,000 on most 2004 trucks and SUVs and $4,000 on most cars.

GM's sales were off 7 percent in August from a year ago. For the first eight months of the year, GM's business is off 2 percent.

GM spent an average of $4,379 per vehicle on incentives in August — the most of any major automaker — though the amount was only $9 more than its spending average in July.

In a move that could hurt profits, GM said last week it was cutting its fourth-quarter production forecast by roughly 7 percent because of inflated vehicle inventories.

Prudential Equity Group's Michael Bruynesteyn recently lowered his estimate for GM's fourth-quarter earnings by 18 cents a share — from $1.75 to $1.57 — because of the diminished production target.

Ford Motor Co., the nation's second largest automaker, said yesterday that it was keeping its current incentives program intact until at least Sept. 30.

On the New York Stock Exchange, GM shares rose 7 cents to close at $43.21 yesterday, while Ford shares fell 31 cents to close at $14.25.