Detroit Automakers Seize on Incentives

DETROIT (AP) _ The American auto-buying public seems to have found an incentive it really likes _ paying the same as the people who build the vehicles. <br/><br/>Driven by the robust response General Motors

Wednesday, July 6th 2005, 9:22 am

By: News On 6

DETROIT (AP) _ The American auto-buying public seems to have found an incentive it really likes _ paying the same as the people who build the vehicles.

Driven by the robust response General Motors Corp. realized by selling cars at its employee rates, Ford Motor Co. on Tuesday joined its two largest U.S. rivals by matching the pricing scheme. GM sales surged 41 percent last month to their highest total in nearly 19 years because of the heavily touted promotion. Chrysler said Friday it also would match such programs.

GM has given the same discount it provides to employees to anyone buying most new GM cars or trucks since June 1. The promotion, which was set to expire Tuesday, will remain in effect until Aug. 1. It includes all 2005 GM vehicles except the Chevrolet Corvette, Pontiac GTO and GMC medium duty trucks.

The discount's popularity came from a combination of aggressive marketing and the appeal of getting an inside deal, said David Cole, chairman of the Center for Automotive Research in Ann Arbor.

``The general public views the employee discount as pretty good no matter what business you're in,'' he said.

Ford Motor Co. said Tuesday its ``Ford Family Plan'' will let all customers buy most of its 2005 models at the employee rate beginning Wednesday. The promotion excludes the Ford Mustang, GT and the Escape hybrid. It also will run through Aug. 1.

``Consumers made it pretty clear in the month of June that they wanted a clear plan for purchasing their cars,'' Ford spokesman David Reuter said.

A Ford Explorer XLT that normally sells for $32,895 costs employees $28,739. After existing customer cash incentives, the sport utility vehicle would sell for $24,739 under the Ford Family Plan. A popularly equipped Lincoln Navigator that normally would sell for $51,145 will be available for $42,133.

At GM, a popularly equipped 2005 Buick LaCrosse CX, which normally would sell for $23,495, costs $19,944 with the discount, and a new GMC Envoy would now sell with a discount of more than $5,990.

DaimlerChrysler AG's Chrysler Group had announced Friday its plan to also match the employee discount incentive starting Wednesday and running through Aug. 1. The plan excludes several models, including the popular Chrysler 300, the Dodge Viper and the Dodge Magnum, Chrysler spokesman Kevin McCormick said.

GM, the world's largest automaker sold 550,829 vehicles last month, up from 374,970 in June 2004, after accounting for differences in the number of selling days between the two months, and a sharp contrast from the single-digit growth the company has posted so far this year.

Almost all the growth came from light truck sales, which jumped 69.2 percent to 375,092 vehicles. The Colorado, Equinox, Tahoe and Trailblazer models posted some of the largest sales increases.

Dearbon-based Ford said domestic sales fell 2.5 percent in June from a year ago and dropped 4.3 percent for the first six months of the year despite hits like the sporty Mustang and growing sales of its crossover vehicles.

Chrysler's sales were up 1.1 percent in June, but the company saw an 11 percent drop in demand for its popular Chrysler 300C sedan, and a 1.5 percent decline in overall car sales. Chrysler's total sales were up 5.2 percent for the first six months of the year.

Gary Dilts, Chrysler's senior vice president of sales, said the company decided to match GM's offer because customers were attracted to its simplicity.

The auto industry also is scouting for ways to trim large incentives, which slice into company profits, Cole noted.

``Over the last few years car companies were raising prices to give bigger incentives. Now, they're moving toward more realistic pricing with reduced incentives,'' he said.

Still, Cole said offering an employee rate to all buyers is a bold step.

``This is a real bombshell,'' he said of GM's sales spurt. ``Rarely do we see this type of impact in such a short time.''