Ford has responded to decreased sales, as well as GM’s latest purchasing incentive, by offering a financed leased vehicle for $US5 a day as a tribute to the ethics of founder Henry Ford. However, the success of Japanese manufacturers in the US, without the use of incentives, is mounting pressure on the big three to retain market dominance.
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Troubled economic conditions, war, the threat of terrorism and decreased consumer confidence have led to hard times for US vehicle manufacturers. They are resorting to increasingly dramatic pricing schemes as well as purchasing and leasing incentives in an attempt to entice timid buyers in the stagnating North American marketplace.
GM has led the way in this new price war, with an interest free loan scheme, but has been matched by rivals DaimlerChrysler and Ford. However, monthly sales figures continued to decline in March, with GM seeing sales reduced by 6.8%, Ford by 7.8% and DaimlerChrysler down by 6.5% compared to March last year.
Ford’s new $5 per day four year 0% finance “Centennial Lease” offer only requires customers to make a 10% deposit and restrict their lease vehicle’s mileage to 12,000 miles per year. The company has announced this offer under the auspice of being a tribute to founder Henry Ford, who paid his workers the then princely wage of $5 a day in 1914.
GM has yet to make a move on the finance leasing market. However, it has led the trend for massive incentives this year with its market-leading Zero to 60 promotion. This offers GM backed loans with five years interest free credit for all its 2003 models except the Hummer. Customers can also choose a cash incentive of $3000 in place of the loan, depending on the model.
In contrast, Japanese manufacturers such as Toyota and Honda have been reporting increasing year-on-year sales in recent months without excessive incentives. The success of these Japanese entrant players in North America is placing the big three under increasing pressure to retain market dominance.
