Big 3 eager to curb deals
Automakers aim to wean buyers off incentives that ate $44 billion in '03 profits
By Eric Mayne / The Detroit News
Automakers are pushing to curb runaway incentive costs after spending a record $44 billion in 2003 on cash rebates and cut-rate financing.
While the deals have kept car and truck factories humming during tough economic times, they’ve also left the Big Three with paper-thin profit margins and a customer base that expects deeper and deeper discounts.
Now the companies are counting on an economic recovery, revamped product lineups and improved quality to help wean buyers from discounts.
Detroit’s automakers also are quietly raising sticker prices and rolling out an unprecedented wave of innovative offers to woo incentive-hungry consumers while protecting profits.
Despite these efforts, few predict a major decline in the deep discounts any time soon.
In 2003, the industry’s per-vehicle incentive spending averaged $2,664, according to Autodata Corp. — up 42 percent from a 2002 average of $1,873. Domestic brands discounted cars and trucks by an average of $3,712 last year, up 45 percent over 2002.
And so far this year, General Motors Corp., Ford Motor Co. and DaimlerChrysler AG’s Chrysler Group have boosted discounts.
Full Article
Automakers aim to wean buyers off incentives that ate $44 billion in '03 profits
By Eric Mayne / The Detroit News
Automakers are pushing to curb runaway incentive costs after spending a record $44 billion in 2003 on cash rebates and cut-rate financing.
While the deals have kept car and truck factories humming during tough economic times, they’ve also left the Big Three with paper-thin profit margins and a customer base that expects deeper and deeper discounts.
Now the companies are counting on an economic recovery, revamped product lineups and improved quality to help wean buyers from discounts.
Detroit’s automakers also are quietly raising sticker prices and rolling out an unprecedented wave of innovative offers to woo incentive-hungry consumers while protecting profits.
Despite these efforts, few predict a major decline in the deep discounts any time soon.
In 2003, the industry’s per-vehicle incentive spending averaged $2,664, according to Autodata Corp. — up 42 percent from a 2002 average of $1,873. Domestic brands discounted cars and trucks by an average of $3,712 last year, up 45 percent over 2002.
And so far this year, General Motors Corp., Ford Motor Co. and DaimlerChrysler AG’s Chrysler Group have boosted discounts.
Full Article