Incentives

Question of the Day: How Low Will They Go?

By Frank Williams
July 28, 2008 -

Last week, I pointed out that there are a lot of brand new trucks sitting on U.S. dealer's lots gathering dust. I illustrated the fact with an ad from a Dodge dealer selling Ram Quad Cabs for 50 percent off manufacturer's suggested retail price (MSRP). As bad off as Dodge is with their 160-day supply of Dodge Ram full-size pickup trucks, they didn't hold a candle to Nissan's 489-day supply of Titans. An email from Cleek tells us that a Nissan dealer in Rock Hills, SC took matters into his own hands this past weekend. He's advertised 45 percent off MSRP sale of pickups, vans and SUVs.  It looks like massively discounted truck clearance sales may be the wave of the immediate future. So far, the biggest discount we've see is 50 percent. How low do you think they'll have to go to clear inventory as the model year winds down and inventory piles up? How long before we see brand new pickups for under $10k? (God help light truck residuals.) Have you seen any dealers in your area offering huge discounts like these on trucks, vans and/or SUVs?

Posted in Dealer News | Incentives | New Cars | News Blog | Sales | 32 comments

Warren Mayor Has the Answer to Detroit’s Problems

By Frank Williams
July 25, 2008 -

The mayor of Warren, MI has the answer to The Big 2.8's woes. The MacComb Daily reports that in a letter to the Michigan Congressional delegation, Mayor James Fouts called for the reinstatement of the federal income tax deduction for interest on auto loans. "More new vehicle sales means more jobs, less unemployment and lower government costs to assist the unemployed," Hizzoner reasoned. Representative Candice Miller thinks "the mayor's idea is very creative." What neither of them seem to realize is that all of the Detroit manufacturers have offered 0% interest rates– and these promotions haven't exactly set sales records. Deducting the interest wouldn't have any effect on payments, and that's what floats buyers' boats. Also, Mayor Fouts better be careful what he asks for. The resulting legislation would be  industry-wide. It would likely hurt the American manufacturers more than it would help them.

MacComb Daily »

Posted in Incentives | Industry | News Blog | Politics | Taxes | 13 comments

It’s a Truck Buyers’ Market

By Frank Williams
July 22, 2008 -

It sucks to be a Chrysler brand franchisee right now. Trucks and SUVs are piling up on lots as dealers try to come up with ways to clear the inventory before the '09 models start rolling in. They have their work cut out for them. At the start of July, Chrysler/Dodge/Jeep dealers had a 160-day supply of Rams gathering dust. If that weren't bad enough, the stores have enough Nitros to last 143 days and enough Aspens to last a lifetime. I mean, 218 days. The Jeep Wranglers they couldn't keep on the lot just a year ago are now piled up 129 days deep. With an average of only 16 truck sales per Dodge franchise, 10 per Jeep franchise and four per Chrysler franchise in June, it may take them a while to dig their way out. But, as they say, misery loves company. Honda dealers are sitting on a 160-day supply of Ridgelines and Mitsubishi dealers are dealing with a 222-day supply of Endeavors. Nissan blows them all out of the water, though. If a 215-day supply of Xterras, a 229-day supply of Armadas and a 247-day supply of Pathfinders aren't enough, the "Lot Queen" crown goes to Titan: there's a four hundred eighty-nine (yes, 489) day supply of the Mississippi-made haulers sitting around. Blow-out clearance sales can't be far behind. 

Posted in Incentives | Industry | New Cars | News Blog | Sales | 40 comments

Nevada Brothel: Spend $300 on a Hooker, Get $50 Gas Card

By Justin Berkowitz
July 9, 2008 -

Gentlemen, start your engines. And head out to Nevada. The Shady Lady Ranch, located in a trailer 31 miles north of Beatty, Nevada, is offering a promotional sale. To cover the cost of gas for the 150-mile drive from Las Vegas, if you spend $300 at the legal brothel, they'll throw a $50 gas card your way. Three hundreds bones buys you an hour with one of their shady ladies, including (according to the website) Rio, Electra, and Dakota. In the first week, they gave out $1000 worth of gas cards. The downside: the 40-minute "quick man" special ($200) does not qualify customers for the gas rebate. As we already know, the cost of diesel has been pounding Nevada's brothel industry, especially in respect to truckers' custom. While this "let's keep America, uh, smiling" campaign may not solve the transportation-to-hookers problem, it should at least soften the blow. So to speak.

Reuters »

Posted in Fuel Economy | Incentives | News Blog | 16 comments

Surprise! GMAC Extends Free Money, Lowers Rates on CPO SUVs

By Frank Williams
July 1, 2008 -

Is anyone surprised? Automotive News [sub] reports that GM is extending the 0% financing for everyone deal through July 7. The conditions are the same: 0 percent financing on most vehicles if you're able to make it through a dealership's door under your own power. Dealers who have increased floor traffic are happy because they're even selling SUVs and full-sized pickups. GM spokesman Pete Ternes said they'll "heavily advertise and promote the sale, especially over the July 4th weekend." With the problems GMAC is already having, giving away money for the next six years can't help their situation. And practically giving away the inventory can't be making GM much money, either. Hole. Digging. Stop. Meanwhile, GMAC is launching a "rate incentive program" on select GM Certified Used Vehicles, including the Chevrolet Impala and Malibu, but especially SUVs. "Well-qualified customers also can receive GMAC 4.9% APR financing for terms up to 60 months on 2003-2008 models of Chevrolet Trailblazer, Tahoe and Suburban; GMC Envoy, Yukon and Yukon XL; Pontiac G6; and Buick Lacrosse vehicles at participating GM Certified Used Vehicles dealers." Yeah, that'll work. 

Automotive News [sub] »

Posted in Incentives | Industry | Marketing | News Blog | 14 comments

GM Offering 0% Financing to Move the Metal. Again.

By Frank Williams
June 23, 2008 -

GM has stated publicly and repeatedly that they're fully committed to cutting back on incentives. Unfortunately, as the saying goes, what they're doing shouts so loud we can't hear what they're saying. Automotive News [sub]  caught wind of a conference call between GM dealers and Marketing Maven Mark LaNeve. GM's [non-PHEV] volte face starts tomorrow, when the ailing automaker will offer 0 percent financing for 72 months on "most Chevrolet and Buick-Pontiac-GMC products." On a $30k rig, that’s about $8100 in savings versus a standard 9 percent rate. If you're buying instead of leasing, The General will add in another $500 in bonus cash (they have to clear the lots before the 2009s start rolling in with their 3.5 percent price increase). And yet, with so many lightly used trucks and SUVs on the market– many with a great GM warranty– even this offer may not move the needle. GM's facing disaster; some analysts reckon their sales could tumble by 28 percent in June. Hence the fact that the special financing will run until they sell something June 30. Or longer. Meanwhile, LaNeve also revealed that his employer's hired Citibank to help it "complete their study" on HUMMER and they're open to "all options" for the brand. Except incentives? Go figure.

Automotive News [sub] »

Posted in Incentives | News Blog | Sales | 22 comments

It Sucks to be a Chrysler Dealer Anywhere

By Frank Williams
June 23, 2008 -

With inflation around 30 percent, interest rates over 20 percent and fuel at all-time highs, auto dealers in Sri Lanka are facing worse times than their American counterparts. (And that's saying something; ChyrCo's U.S. sales are down 19.3% year-to-date, 25.4% in May.) One dealer is trying a time-honored tactic to move the metal: a buy-one-get-one-free promotion. Lanka Business Online (LBO) reports that Diesel and Motor Engineering company (DIMO) is offering a free Tata Xeta when you buy a new Jeep 4×4 or Chrysler Grand Voyager van. Chryslers aren't selling in Sri Lanka because of "their high prices and maintenance costs and consumer preference for cheaper rival brands." LBO also points out they have lower fuel economy ratings than other cars, because "Chrysler is a US firm, where fuel has been lightly taxed compared to the rest of the world." DIMO said the promotion should also "help liquidate the stock of older models of the Xeta." Perhaps U.S. Chrysler dealers should try a reverse tactic: buy a Caliber, Sebring or Compass and get a Durango, Aspen or Commander free.

Lanka Business Online »

Posted in Incentives | News Blog | Overseas | Sales | 16 comments

Consumer Reports Pwns Chrysler Gas Promotion

By Edward Niedermeyer
June 20, 2008 -

Much digital ink has been spilled over Chrysler's "refuel America" promotion. The deal locks fuel prices at $2.99 per gallon for the first 12k miles for each of three years (subject to acres of fine print). Consumer Reports took a closer look. Over the first three years of ownership, the cheap gas gives Chrysler a competitive cost of ownership. After five years, your Chrysler will have cost you between $1k and $8k more than its competitors.  That's driving 12k miles annually, based on CR's "real world" mileage ratings and total ownership cost analysis. It gets worse. The cost of owning a gas-carded Chrysler is higher than buying the same vehicle with the optional zero percent interest rate. The Hemi-equipped gas hogs, for example, cost over $6k more with the gas card during five years of ownership. Little wonder then, that under ten percent of Chrysler buyers are choosing the gas card. The upshot? CR suggests that if you must buy from the Pentastar, take the low interest rate. "However," they say, "we would recommend you consider all vehicles in the segments, as there simply are better choices available based on our testing and analysis." Ya think?

Consumer Reports »

Posted in Fuel Economy | Incentives | Media | News Blog | 30 comments

Wagoner ($15.7m ) and Mulally ($22.7m) Bank Big Bucks in ‘07

By Robert Farago
June 16, 2008 -

If the Board of Directors at GM and Ford want to pay their CEO a billion dollars a year to run their companies into the ground facilitate their turnaround, far be it for me to tell them they should do otherwise. But if you're looking for a reason why these two automakers are on an engine out terminal approach, clock those annual pay packages and remember that they are the tip of the iceberg of over-paid unaccountability. Add in the rest of their executives' compensation and you have a culture of entitlement that makes Moctezuma's priests seem like chimney sweeps. The info [via The Detroit News] raises at least two important questions. First, why were we thinking that GM CEO Rick Wagoner earned $14.4m last year ($1.3m less than today's report)? Second, what was all that about Ford CEO Alan Mulally's pay being front-loaded to account for the fact that he left Boeing behind? Big Al's '07 $22.7m comes after last year's $28.2m. I make that $51.4m for two year's work. There are lot of other ways to crunch those numbers, as even the DetN feels it must. Wagoner's 64 percent rise "followed the posting of a $39 billion loss in 2007, a year when GM's stock price fell by about 19 percent, without adjusting for dividends." The DetN forgets to provide the same info for Ford. FYI FoMoCo lost $2.7b ($3.5b in NA) in '07 and their share price dropped 10.4 percent. Nardelli? Chrysler? That information is privileged…

The Detroit News »

Posted in Incentives | Industry | News Blog | 31 comments

Get Good Grades and Dad Will Get You a Cobra Kit

By John Horner
May 28, 2008 -

The New York Times has a story on car nut Fred Heiler and his son Tim. It seems that Tim wasn't quite living up to his potential in middle school– thanks to girls and video games. But his progeny's Cobra love led to a parental epiphany: "'O.K., bud,' I said in a weak moment, 'if you get on the honor roll and stay on throughout high school, we'll buy you a Cobra kit when you graduate.'" The incentive worked: "Indeed, he began to apply himself in school, and in a couple of marking periods we got a congratulatory note and an honor roll sticker with his report card…. Good grades became the norm all through high school. Tim graduated with honors in 2006. True to his word, Fred bought a Cobra kit from E.R.A. in Connecticut. Father and son built the car together in the garage. "With Fleetwood Mac or Green Day blasting, we'd chatter about car stuff, school or music while we worked, but at other times we'd proceed without speaking, anticipating each other's moves and handing each other the right tools at the right time." The two shade tree mechanics plan to attend a safe driving school together this summer. Cobra? Driving school? Sounds like a plan.

New York Times »

Posted in Incentives | News Blog | People | 22 comments