GM has unveiled its latest incentives scheme. In an attempt to kick-start the flagging North American leasing and retail car markets, GM is planning another round of generous incentives. Its standard incentives schemes have done little to boost GM’s market share so far this year, but at least it seems to be faring better than rival Ford.
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GM’s lease customers will now be able to waive up to six months of lease payments, provided they commit to buying or leasing another GM vehicle when their existing contracts expire. The scheme will apply to customers whose leases expire between July 1 2003 and January 2 2004 and will cover all GM’s leasing customers, except those with Saabs, Hummers or medium trucks; model lines which have suffered less in recent times. The move is the latest dramatic attempt by big American companies to breathe some life into a stagnating market and reduce customer churn.
GM’s sales were down 10% in the first four months of this year, compared to last year, with its standard incentives schemes apparently producing little in the way of results for GM’s market share. In addition to this lease market focused initiative, the company has also begun to offer six-year finance loans at 1.9% interest on most of its passenger vehicles. At present, these schemes exclude GM’s luxury brands such as Cadillacs, Hummers and Corvettes, which are generally outside the remit of the leasing market.
The US market, which is expected to account for over 16 million unit sales of passenger vehicles this year, has shrunk since last year and major manufacturers are competing ever more fiercely on price and incentives schemes. With even relatively successful players such as Toyota entering the price war, GM is particularly hard pressed at present to retain market dominance. However, it seems to be doing better than Ford, whose recent losses have further impacted on the lack of market confidence.
However, at present GM’s tactics have done little more than gain publicity for the company. It will take some time to gauge how effective its strategy has been in terms of driving growth in the leasing market.
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