Detroit Automakers Increase Incentives

DETROIT April 1, 2004; Reuters reported that Detroit's automakers ratcheted up their U.S. sales incentives on Thursday, heating up a long-running price war in the early days of the auto industry's traditionally strong spring selling season.

General Motors Corp. said its new offers included an extra $1,000 cash-back and interest-free financing on loans for up to five years on most of its pickup trucks and sport utility vehicles.

The extra $1,000 "bonus" cash is in addition to cash rebates of up to $3,500 on many models. The new incentives are available on most 2003 and 2004 model year vehicles, and consumers must take delivery of the vehicles by June 1, GM said.

GM's cross-town rival, Ford, said it was adding $500 to the cash-back offer on some versions of its popular F-150 pickup truck, meanwhile, bringing the total rebate on some models to $1,500.

Ford also added $500 to the rebates on its 2004 model Focus car and compact Escape SUV, raising the cash-back offers on those vehicles to $2,500. Ford, which has seen a slow start to sales of its all-new Freestar minivan, raised the customer cash available on that vehicle to $4,000.

The Chrysler arm of DaimlerChrysler, tweaking its incentive program as well, sweetened cash-back deals on its Dodge Durango SUV and said it was offering a $1,000 rebate on its all-new 2005 minivans, which just went on sale.

GM, the world's largest automaker, has called most of the shots in the U.S. auto industry's profit-eroding incentives battle since the Sept. 11, 2001, attacks in New York and Washington.

Incentives have been largely unchanged since late last year, amid forecasts for robust 2004 sales. But Paul Ballew, GM's chief of market and industry analysis, said in a conference call with Wall Street analysts and reporters on Thursday that he sees a ramp in incentives in the next few months.

GM spent an average of $4,211 in sales incentives per vehicle sold in the United States in February, the highest rate in the industry, according to Autodata. But according to Edmunds.com, an online resource for automotive information, the Chrysler arm of DaimlerChrysler AG spent more per vehicle in incentives than GM.

Some vehicles are excluded from GM's new incentive program, including the Hummer H2, most Cadillac SUVs and trucks and some large work pickup trucks. (Additional reporting by Tom Brown, Detroit)