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The Honolulu Advertiser
Posted on: Friday, June 23, 2006

GM plans to counter in incentives war

Detroit Free Press

DETROIT — In what's shaping up to be another round of summer incentive wars, General Motors Corp. is planning to roll out a zero-percent, six-year financing program for most 2006 models as soon as next week, according to dealers and industry sources.

The possible GM program comes on the heels of Chrysler Group executives confirming yesterday that they plan to launch a new incentive program for July 1. Chrysler Group executives would not detail the new program but said they were considering employee pricing, where customers get the same prices as company workers.

Earlier this month, Ford Motor Co. launched a program to provide no-interest loans and $1,000 gas cards to buyers of most 2006 Ford-brand vehicles.

The fresh round of discounts is on the way as GM, Ford and the Chrysler Group try to keep sales from sliding, particularly in their SUV lineup, and clear out inventories of 2006 models, analysts say.

"It's clear that General Motors, Ford and Chrysler have to do something," said Mark McCready, director of pricing strategy and market analysis for CarsDirect.com, a Los Angeles-based car-buying and research Web site.

Automakers have rolled out a host of incentive programs in the past five years, starting in late 2001 with GM's "Keep America Rolling" no-interest-loan program. Last summer, the incentive of choice became employee pricing. GM started its program first but was followed closely by Ford and the Chrysler Group.

The programs helped pump up sales, but some analysts criticized the incentives for eating into profits, pulling ahead sales and creating customer expectations of major discounts.

GM would not confirm whether it would be offering a zero-percent, 72-month program, but several dealers and industry sources said they expected the program to be announced next week.