The company started the 0 percent blitz at the end of September, forcing top competitors to follow suit, which put GM in the driver’s seat. The result for GM has been double-digit sales increases in October and November, and a 27.1 percent market share in November— a 1.3 percentage point boost from 2000 — the largest share increase in November in the United States.
Paul Ballew, GM’s general director of global market and industry analysis, said 0 percent financing has been so successful that GM will back off regional and brand incentive programs to continue single, companywide national programs like 0 percent.
“What ‘Keep America Rolling’ did was provide a jump-start,” said Ballew, who is responsible for all of GM’s vehicle sales, service and marketing research. “The key is to treat those (regional needs) as the exception and not the rule.”
Such programs are expensive, pushing GM’s average incentive costs to an estimated $3,477 per vehicle compared with $2,897 in August, the month preceding 0 percent financing, according to CNW Marketing/Research in Bandon, Ore. But GM has taken several steps to offset the increased costs.
“When all is said and done, we will have a more simplified structure.”
Deal is kingAccording to a recent research report by Sanford C. Bernstein & Co., consumers are more concerned with vehicle styling and deals than they are with brand image.
“Consumers are not going to run to a piece of crap, but no longer is it enough that because it’s a Toyota it’s superior,” analyst Hill said. “As the gap in quality gets closer, consumers will turn to other sources. This simple 0 percent has done that. It has gotten consumers to look at products that they may not have considered before.”
But GM’s competitors say they want out of the game. Until 0 percent, the automotive industry increasingly had regionalized incentives because certain products sell better in certain areas and because of seasonal differences.
Toyota Division, for example, pledges not to follow GM’s retreat from regional incentives. Toyota has its Tundra, Corolla and 4Runner on 0 percent, marking the first time the division has done a national incentive.
“What goes on next year is open to question,” said Steve Sturm, vice president of marketing for Toyota, “but we can’t try to cookie-cut a one-program-fits-all.”
The Chrysler group doesn’t want to follow GM either. It just created five regional business centers in March to respond more quickly to dealers’ needs.
“Things are different in California than they are in Florida, New York or Chicago,” said Jeff Bell, Chrysler’s vice president of marketing communications. “People have a different idea of what adds value for them, both from product to a financing offer.”
Dealers mixedDealers pushed GM for simpler incentives, said Conrad Darby, Buick dealer council chairman and CEO of Darby Automotive Inc. in Sarasota, Fla., and Venice, Fla.
“It’s a customer satisfier when we don’t have to read 52 pages to find out if someone qualifies for an incentive,” he said.
GM will ask, but not require, dealers to advertise national incentive programs. Ballew said GM also will continue to advertise divisional brands nationally in addition to the deal.
“It doesn’t mean we as a company are on sale or that the discounting strategy is the way to win,” he said. “We’ll still invest in brands and the attributes of products.”
Kathy Jackson, editor of Automotive News Marketing, and Special Correspondent Laura Clark Geist contributed to this report