0 percent is a hard act to follow

Everybody is talking about what will happen when the automakers pull the plug on 0 percent financing.

No one will be silly enough to go cold turkey, so the Big 3 will have to come up with something to keep this momentum going.

What recession, you ask? Is 0 percent responsible for this tremendous sales surge during the last quarter?

Probably. It sure shows that Americans can ignore a recession if there is a sale that catches their eye. And this incentive was so simple that it caught everybody’s eye.

It was so simple that it brought into the market people who otherwise would not have bought a car. They weren’t shopping, but when they heard about the 0 percent financing incentive, they decided that it was an offer they couldn’t refuse.

It’s wrong to assume that the bottom will fall out of the market just because the present program ends.

But it will take another bright idea or there will be a dramatic falloff — not off the cliff, but down, unless someone comes up with a creative idea.

And it can’t be the same old tried-and-sometimes-true incentive that offers a choice of umpteen dollars off or a low financing rate.

This time, something really clever will be required.

We can give Ron Zarrella credit for 0 percent financing. It was his last act before leaving General Motors and returning to Bausch & Lomb.

Maybe this time there will be more dealership retail incentives. I have always wondered why a smart dealership or dealership group didn’t try a rebate of its own, separate from the factory incentives. It makes sense in a very competitive market. And there still is enough slack between invoice and MSRP to make it very interesting.

Now that we’re officially in a recession, next year will be very interesting.

Carmakers must keep their volume up to survive.

Dealers will do fairly well if the incentives continue to flow, and customers still are looking for the deal of the century, even if it is a fairly new century.

Suppliers will continue to struggle with costs and pricing.

This business is never dull, but next year it will really be fascinating.

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