Auto Outlook: Carmakers pull incentives out of the playbook

By AL SWANSON, United Press International  |  July 15, 2012 at 5:30 AM
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Some U.S. automakers are reaching back to the successful plays in the sales manual -- buyer incentives have returned.

After posting good sales for the first half of 2012, carmakers hope offering a few extras in addition to the usual summer clearance events and tent sales will help move vehicles off dealer lots during the remainder of the current model year.

Chrysler has revived its "No Payments for 90 Days" for Chrysler, Dodge, Jeep, Ram truck and Fiat vehicles through the end of August. Chrysler is also offering $3,000 cash back on 2012 300C sedans and $750 incentives for buyers who don't currently own a Chrysler vehicle that buy a 2012 Town & Country or Dodge Caravan minivan.

Ford's "Summer BBQ" promotion, which runs through Sept. 3, offers buyers $500 to $1,750 cash back and/or zero percent financing for as long as 60 months.

Not to be outdone, General Motors announced a 60-day return policy for Chevrolet. Buyers who don't love their new cars can return them.

Under the "Chevy Confidence" program buyers can bring back a new 2012 or 2013 Chevy and buyers of 2012 vehicles qualify for "no-haggle" pricing lower than the manufacturer's suggested retail price on the window sticker but higher than the discount price offered to GM employees. The program ends at the close of business Sept. 4.

"It is a way to get rid of your old model-year vehicles," senior analyst Jessica Caldwell told The Detroit News.

There are a few rules. Chevy will only take back undamaged vehicles that have less than 4,000 miles on the odometer. Buyers who don't want a return guarantee can opt for a $500 cash bonus on many Chevy models.

Buyers who return a Chevy get their money, including sales tax back, but will be on the hook for any other taxes, license and registration fees and extended warranties.

In 2009, the last time Chevy offered a money-back guarantee, only 400 vehicles were returned, the Los Angeles Times said.

South Korea's Hyundai took back just 300 vehicles the same year under its Hyundai Assurance refund program covering buyers if they lost their jobs during the economic recession.

"It is a smart and cost-effective program that will work toward diminishing the perception gap of the Chevrolet brand, particularly in coastal metropolitan areas where consumers have a stronger preference for the import brands," vice president Jesse Toprak told the News.

AutoData said Chevrolet sales were up 6.3 percent January through June compared to the same six months of 2011 but that Chevy's U.S. market share fell from 14.3 percent in 2011 to 13.2 percent in the first half of 2012.

Mileage claims: too good to be true?

A consumer watchdog group is taking Hyundai to court in California for allegedly inflated mileage claims in advertising for its best-selling Elantra compact.

The suit contends Hyundai advertised the Elantra gets 40 mpg without disclosing that fuel economy figure is for highway driving only.

Louis Bird, the Sacramento plaintiff in the suit, kept a mileage log that showed his 2011 Elantra barely got 29 mpg. The suit jointly filed with Consumer Watchdog of Santa Monica, Calif., seeks class-action status for owners and lease-holders of 2011 and 2012 Elantras and to stop Hyundai from advertising what it claims are unsubstantiated mileage numbers.

U.S. Environmental Protection Agency rated the Elantra at 40 mpg on the highway, 29 mpg in city driving for a combined 33 mpg. Consumer Reports testing found the popular compact averaged 39 mpg highway/20 mpg city for a combined fuel economy of 29 mpg.

Hyundai defends its advertising and said the suit has no merit, the Los Angeles Times reported.

"This is becoming a customer satisfaction issue. If you sell them on an attribute they don't get, it can come back to bite you," Aaron Bragman of HIS Automotive told the Times.

America Honda Motor Co. settled a similar lawsuit for an estimated $170 million earlier this year filed on behalf of owners of Honda Civic hybrid models.

Chinese favor U.S. cars

U.S. auto giants Ford and General Motors both sold a record number of vehicles in China -- the world's fastest-growing auto market -- in June, but there are fears of a slowdown.

Ford said it sold 53,440 passenger and commercial vehicles in China last month, up 18 percent from May, largely on the popularity of the new Ford Focus, while GM sales hit 214,495 vehicles, a more than 10 percent increase from June a year earlier.

Chinese consumers sent Buick sales up 5.7 percent from January through June in the same period last year, Cadillac posted a 3.8 percent sales jump and Chevrolet sales rose 1.8 percent.

Fortunately for U.S. automakers, Chinese buyers are opting for foreign brands over homegrown autos, which tend to be cheaper and have fewer safety features that more and more Chinese drivers want.

The China Association of Automobile Manufacturers said total vehicle sales in the first half of 2012 were up 2.9 percent to 9.6 million vehicles, with sales of passenger vehicles up 7.1 percent. However, an analyst expects sales growth to slow to single digits for the rest of 2012 if more cities like Beijing and Guangzhou restrict auto purchases to fight traffic congestion, The Wall Street Journal said.

"Despite signs of slowing economic growth in China, demand for GM products rose in all key segments in the first half of the year, said Kevin Wale, president and managing director of GM China Group, in a statement. "We expect sales growth to remain steady in the second half, driven by demand in China's interior provinces."

In another emerging market, the Society of Indian Automobile Manufacturers recently reduced its car sales forecast from a 10 percent-to-12 percent increase to 9 percent-to-11 percent hike because of weakening demand for gasoline engine-powered cars and trucks.

Sales of diesel engine vehicles, especially SUVs, are expected to rise because diesel fuel in India is 39 percent cheaper than gasoline due to government price controls, the Journal said.

Vehicle sales rose 8.3 percent in India in June from a year earlier.

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