Incentives after GM’s big losses

McALLEN — Multi-billion dollar losses at the world’s largest automaker are turning out to be a gain for car buyers.

This week, General Motors Corp. told its dealers to roll out a round of incentives on new vehicles.

“We are having a President’s Day sale, which kicks off on the 14th,” said Carl Johnson, general manager of Fiesta Chevrolet in Edinburg. “They’ve been staying right on top of things and offering bonus cash and incentives.”

Discounts and incentives run from $3,000 to $5,000 on selected higher-end 2007 and 2008 models.

Johnson said the incentives would be adjustments of previous deals, such as dealer financing, and cash for options like entertainment systems and other extras.

Salespeople at competing Ford and Chrysler/Dodge dealers said they hadn’t heard news of their own companies responding to GM’s incentive increases.

The sales come after the company announced a $38.7 billion dollar loss for 2007, when GM was hampered by a tightening credit market, a slow economy and consumer unwillingness to spend. GM is the parent company for several leading brands, including Chevrolet, GMC, Hummer and Saturn.

GM dealers across the Upper Valley said discounts should help them compete against automotive rivals like Toyota, Ford and Chrysler.

Despite the huge loss last year, GM actually recorded a U.S. vehicle sales increase of 2.6 percent during the first month of 2008, according to Autodata Corp., an auto sales tracking company. Most of the increase came in the truck category. GM sold about 251,000 cars during the month, 6,000 more than January of 2007.

“We’ve had a good January and a good February,” Johnson said. “Our market share has been increasing.”

Bigger deals would come on the larger-ticket items, such as the Chevrolet Tahoe or GMC Envoy Denali, which are already slated for dealer financing, as well as $3,000 and $2,000 allowances for items such as down-payment assistance.

New incentives of about $1,000 would be added on to existing deals, said Kirk Clark, owner of Charles Clark Chevrolet in McAllen.

“I think in terms of our prospects for 2008, we feel very strong about it,” he said.

Big incentives and sales - such as special financing options, discounts and savings on upgrades - have been a staple in the auto industry since the economic downturns began this decade.

That’s when many companies, aided by low interest rates from the Federal Reserve, started offering zero-interest deals.

Clark said he wouldn’t be surprised if those like Ford and Chrysler soon started following GM’s latest lead and offered their own discounts or incentives.

Last year, when GM adjusted its vehicle sticker price to bring it closer to the actual negotiated selling price, other companies quickly followed suit, he said.