GM revives no-interest loans on some of its models

Alternative to cash back

Ford, Chrysler respond

March 02, 2002|By BLOOMBERG NEWS

DETROIT -General Motors Corp. brought back no-interest loans on some models yesterday as an alternative to as much as $2,002 cash back. Ford Motor Co. and DaimlerChrysler AG's Chrysler responded by extending incentives to compete for sales.

The latest plan from General Motors, which began no-interest loans in September and switched to cash rebates in January, runs through this month. Ford on Tuesday will extend through April 8 its rebates of up to $2,500 or zero-percent financing. Chrysler through March is continuing cash back of as much as $2,500.

General Motors's incentive move comes as the automaker said its U.S. sales rose 0.4 percent last month, while those at Ford fell 12 percent and those at Chrysler declined 11 percent. General Motors led with discount loans after the Sept. 11 attacks and its biggest rivals followed, giving up some profit to spur sales.

"We're not thrilled" with the latest round of incentives, said Chris Wiles, president of Rockhaven Asset Management LLC, which owns about 25,000 convertible preferred shares of General Motors and about 19,000 of Ford. "I'd like to see companies concentrating on profitability."

For Detroit-based General Motors, bringing back the no-interest loans while continuing cash rebates is intended to boost sales to individual consumers and "help us keep our momentum going," spokesman Jeff Roegner said.

The largest automaker's new plan offers rebates or no interest on 36-month loans on some models, Roegner said. General Motors excluded Cadillac, Saturn, Saab and Hummer vehicles, the Chevrolet Corvette sports car and all 2003 models.

Ford, the second-biggest automaker, also will pay as much as $1,500 to customers who lease a new vehicle when they return their current leased car or truck, spokeswoman Susan Krusel said. The Dearborn, Mich., company may adjust the amount of rebates on some models Monday, she said.

Chrysler's rebates start at $500, with most at $1,500 or $1,500, and some buyers can also choose discount financing. Chrysler said its latest offer exempts the Jeep Liberty sport utility vehicle.

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