GM's Incentive Mania Spreads to China
August 21st, 2007 12:51 PM Share
General Motors is offering interest-free financing on new Buicks. But don't bundle up grandma and grandpa and trundle down to your local Enclave emporium. You'll have to go to China to take advantage of this deal. Bloomberg reports GM has the dubious honor of being the first automaker in China to cave to competition and offer interest-free loans to try to bolster sales. The only stipulation is that the buyer has to make a 40 percent down payment. While that seems excessive on this side of the Pacific, banks there usually require 60 percent down for financing so it's a pretty good deal. Whether this will lead GM into an [all-too-familiar] incentive spiral is yet to be seen. But they may have taken the first step on that slippery slope.
Published August 21st, 2007 12:51 PM
Join the conversation
4 of 6 comments
Isn't China one of the few places GM was actually making a profit.
Years ago GM established GMAC when no one wanted to loan money on a “new fangled invention” called the car. They are doing the same thing in China, where most cars are paid cash, they are establishing “time sales” with a strong down payment. Its not different than GMAC in North America 50 years ago. It might all be "recourse paper" where the selling dealer is on the "hook" for the loan, or deficiency.