Car companies including General Motors (GM: 2.01, 0.081, 4.2%) Hyundai and Ford (F: 4.22, 0.235, 5.9%) were among the first to launch buyer incentive programs that make big promises to buyers including unemployment guarantees and extended warranties, among other things.
The incentives were designed for one purpose: to increase consumer confidence and purchases. But the big question is: Are they working?
Though it’s too early to tell any long term impact the programs might have, it seems dealerships across the country are still waiting to see results.
At Kingston Buick Pontiac GMC in Kingston, N.Y., sales manager Mitch Nelson said that even though the incentives might be getting a few more customers through the door, they haven’t convinced anyone to sign on the dotted line.
“It’s not at a consistent pace yet,” Nelson said. “I think everyone is waiting to see what GM is going to do as a company, if they are going to reorganize and where that’s going to leave things.”
Nelson said that the uncertainty in GM’s future was the “biggest hesitation” among prospective GM buyers right now.
Although new car sales aren’t up yet at Nelson’s dealership, he said that used car sales have definitely increased since this time last year.
“Trucks seem to be the most popular right now because the cost of gas is down since 2008,” Nelson said.
GM’s “Total Confidence Plan,” features an unemployment guarantee that says GM will make payments of up to $500 per month on all new cars for a full nine months if a person can prove he or she is unemployed. Additionally, GM is offering a 100,000 mile Powertrain warranty.
At Hatfield Buick GMC in Redlands, Calif., sales manager Mickey Heaton said that even with guarantees, sales are still level.
“We haven’t noticed an increase in sales since they launched the incentives,” Heaton said. “We’ve probably actually seen a decrease in sales of used vehicles since they took away certain incentives there.”
Heaton said that in order to promote new car sales, GMC had removed certain incentives from its used car inventory.
While Heaton said he hopes the incentives will get more people through the doors in the coming months, he said he had “no idea” if sales were going to increase or decrease at this point.
GM wasn’t the first car company to offer the guarantee. Hyundai started the craze in January with its “Assurance Plus” program, which offers buyers the opportunity to return the car within the first year of purchase and make three payments on the car if they become unemployed.
At one Colorado dealership, it seems four months of incentives are beginning to get people through the door.
“Traffic is similar to what it has been in the past,” said Angela Kent, new car sales manager of Go Hyundai Mazda in Westminster, Colo “I think [the incentives] have helped turn some buyers to Hyundai that would have been loyal to other brands in the past.”
Kent said that more people had come through the door since the incentives were offered, and had seen what Hyundai has to offer.
“Curiosity has brought customers in, and they are pleasantly surprised,” she said, adding that many people had heard about Hyundai through incentive-pegged advertisements and had come in because of prices that are lower than many of their competitors.
Kent said that Hyundai’s hatchback was a strong competitor to the Honda Fit, and that the Hyundai Genesis Sedan was giving several Lexus (TM: 79.2336, 3.4936, 4.61%) vehicles a run for their money.
Though Kent said sales at her dealership had not necessarily spiked as a result of the incentives offered, she said that “flat is the new up,” and pointed flat sales in the current market as a positive thing.
“If you can have a 1% increase in sales on a month to month basis, that is considered a success,” she said.
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