As the U.S. automobile industry faces massive challenges, some new consumer incentives by GM and Ford for the purchase of new cars are giving both dealers and customers some good leverage room.
In the past week, both GM and Ford have announced new incentives and payment protection plans they hope will give consumers that push they need to stop holding off making new car purchases.
Winter sales of automobiles have been dismal nationwide. Reports locally and nationally have indicated consumers switched to purchasing used cars over new cars.
But, with these new incentives, that may be about to change, according to industry Web sites. According to Edmunds.com, the new incentives and payment plans are making it cheaper to buy a new car than a used car.
In a news release, Edmunds.com announced deals on some new cars are so good, they actually make the new car less expensive than the one-year-old used version of the same model.
Local GM dealers says the payment protection plan is a nice benefit, but since Enid hasn’t been dealing with large unemployment numbers like some of the major metro areas have, that incentive hasn’t drawn a lot of customers into the showroom yet.
Randy Hamm, owner of Stuart Pontiac-Cadillac-Nissan, said while new car business still is down, the market is firming up for some of the large utility vehicles and pickups that fell out of favor during the summer of 2008. He also said the used car or pre-owned market also is firming up.
“That’s good for the consumer because their trade-ins are worth more,” he said. “We are starting to see a shift this month for people looking at new cars,” Hamm said.
Shane Jackson, general manager of Jackson Chrysler Dodge, agreed if someone is looking for a new car, the incentives are there.
“Right now the incentives are at an all-time high,” he said.
Dealers say there hasn’t been a more unusual time to buy a new car. They have plenty of inventory. Lease deals are harder to find and generally less appealing than in the past, according to Consumer Reports.
“This is a rare moment in time and one that may pass before summer,” according to Consumer Reports. In fact the new incentives announced last week by GM and Ford both end by June 1.
The financing and rebate options available for new cars also should be attractive to new car buyers, said Leonard Northcutt, president and chief executive officer of Northcutt Chevrolet Buick.
“When you look at 0 percent for 72 months, even though the new car is higher priced, you compare the interest rates for a used car between 5.5 and 8.5 percent, buyers can save money buying the new car,” Northcutt said.
Bloomberg reports U.S. sales are starting to “open up” as the $7.5 billion in aid to the lending arms of General Motors Corp. and Chrysler LLC eases a loan logjam for buyers.
Local dealers agree the winter months usually are the slow months, and sales generally pick up in April through October. Dealers already are seeing more people come in the door, they say.
For those looking to purchase a new car, below are the new incentives and payment protection plans offered. Be sure to read the detailed terms and conditions that apply when purchasing these new vehicles. Discuss these details with your local car dealer.
GM Total Confidence Plan
• Product protection: Fully backed five-year, 100,000 mile powertrain warranty on most GM vehicles.
• Family protection: Safety and security of OnStar for one year on most GM vehicles.
• Vehicle value protection: Purchase and finance any eligible new 2008, 2009 or 2010 GM vehicle and you can receive up to $2,500 (on a sale) or up to $5,000 (on a trade-in) if you owe more on your vehicle loan that its retail value.
• Payment protection plan: Finance or lease any eligible 2008, 2009 or 2010 GM vehicles and if you should lose your job due to economic reasons during the first two years of ownership, GM can make your payments for up to $500 a month for up to nine months.
Ford Advantage Plan
Purchase or lease an eligible new vehicle until June 1. If you should become involuntarily unemployed before Jan. 1, 2010, Ford will make your payments for up to $700 month for 12 months.
Chrysler Employee Plus Pricing
Chrysler has announced an end date for its Employee Pricing Plus deals. The sales event will come to an end April 30.
The sale consists of Chrysler, Dodge and Jeep vehicles getting an array of incentives, including a reduced sticker price (or employee price), plus a cash-back rebate and 0 percent financing for up to 48 months for qualified buyers.
Used car interest rates
General summary of interest rates charged by banks for used cars. Interest rates can vary based on different factors. Consult your local bank.
Two-year old vehicle up to 48 months at 7.75 percent
Three-year-old vehicle up to 42 months at 7.50 percent
Four-year-old vehicle up to 42 months at 8 percent
Five year-old vehicle up to 30 months at 8.25 percent
Six-year-old vehicle up to 24 months at 9 percent
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