COMMENT: 'Gambling weeks' to fight the slack summer period

The spirit in the auto trade is more than low

Franz W. Rother is Editor-in-Chief of Automobilwoche

Government-regulated summer sales have been abolished in Germany. But the retail trade does not seem to want to abandon this special sales format. Price reductions of up to 60 percent lure bargain hunters into shopping centers to get rid of any summer items that remained on the shelves due to the uninspiring weather.

Cars can not yet be found on the bargain counters. Their weight prevents this. However, the summer sales spirit has also hit the auto trade.

Renault announced "gambling weeks" to get rid of large stocks of day registrations. Other manufacturers use more conventional methods. Nissan started a "plus initiative" to newly position its cars regarding pricing. Day registrations are being reduced. The cars are being better equipped and prices are lowered.

Skoda believes it is "simply clever" by turning better-equipped special models into the new series standard. This is nothing but hidden price reduction.

Ford used the same method this spring to increase business. Far more than half of the new registrations now are Viva special models, Ford-Werke boss Bernhard Mattes told Automobilwoche.

There is no end to the list of similar campaigns. No manufacturer can escape the incentives war nowadays.

At VW in Wolfsburg, market strategists are using the summer break to think about what the new accessory packages for the Golf should look like. The 30th anniversary offer for the Golf model series, which gives buyers a free climate control, will run out in September.

Some VW dealers are already one step ahead of their manufacturer and are offering their own special model creations in newspapers' small ads sections.

Even BMW dealers are howling with the pack. A large dealer chain from the Rhineland has started its own initiative and is offering an "early order" discount for the new 1 series compact car, which will be launched on the market in September.

The flood of special models and direct or indirect price cuts made an impact in June. The number of new registrations rose by 4 percent.

The other side of the coin is that dealers' livelihood are threatened and that their confidence in a positive business development diminishes further and further.

The spirit within the trade is more than low. No wonder. A Ford dealer told me that he and his colleagues had to undertake significant price adjustments since the introduction of the special models. Stock vehicles can no longer be sold at the originally calculated price. Some businesses are close to bankruptcy.

Automobile manufacturers also increasingly feel the effects of the incentives war. "We do not have problems with unit sales but with profit," VW boss Bernd Pischetsrieder admitted recently.

After DaimlerChrysler, VW and Opel also now plan to tighten their belts and demand concessions regarding wages and working hours of their employees. Auto buyers' joy over incentives might soon give way like summer breezes to the cooler winds of autumn.