Automakers boost incentives to stoke sales

DETROIT, May 30 (UPI) -- With car buyers hooked on incentives, U.S. automakers are upping the ante to raise sales in a sluggish economy.

Autodata Inc., which tracks industrywide sales, said average per vehicle incentives likely will exceed $2,500 in May, up from $1,691 per vehicle in May 2002. Incentives hit a record $2,508 in April with Ford and General Motors taking $2,500 off new 2003 models and DaimlerChrysler's Chrysler Group discounting an average $3,300 per vehicle.

U.S. sales rose to an annual rate of 16.8 million vehicles in April, down from 17.6 million vehicles in April 2002.

Ford had an inventory about 925,000 vehicles -- about an 87-day supply. GM had 1.25 million vehicles already built, 25 percent more than a year ago.

"The pressure to keep incentives high and move them higher will be pretty intense given the amount of inventory and relative sluggishness we're seeing in sales," Bob Schnorbus, chief economist for J.D. Power & Associates told CNN. "It's hard to imagine them going higher, but GM did throw another $1,000 (per vehicle) on its incentive programs the last week.

Current buyer incentive plans expire on Monday, including zero-percent financing for 60 months, but with large inventories of 2003 vehicles on hand good deals are likely to remain in effect.

"The consumer knows the manufacturer has to offer incentives and they will wait out the manufacturer," said Schnorbus.

Industry analysts say slowing sales have put consumers in the driver's seat and that even with zero-percent financing and fatter cash-back offers sales are likely to be tepid over the summer.

"Sales in the short-term are going to be more governed by the general economic landscape than currency exchange rates or consumer confidence measures," said George Pipas, Ford Motor Co. manager of sales analysis.