DETROIT - Pizza parlors do it. Dry cleaners do it. Now it is Detroit's turn.
In a dramatic escalation of the rebate war, Ford Motor Co. and Chrysler Corp. are copying General Motors' loyalty rebate with discount coupons for their own vehicle owners.
On Thursday, April 23, Ford said it will send coupons of $500 to $1,000 to original owners of 1986 and newer Ford, Lincoln and Mercury models. On Friday, April 24, Chrysler said it would send similar coupons to Dodge, Chrysler, Plymouth, Jeep and Eagle owners.
'We felt we had to respond to Ford and GM,' said Steve Torok, Chrysler executive director of sales and marketing operations.
And just like pizza companies, Chrysler and Ford will honor selected certificates issued by their Big 3 competitors. GM is not honoring competitors' coupons.
To some, the incentive race raises the question: Is the five-year streak of robust auto sales over? But many analysts see this as just a skirmish among the Big 3, prompted partly by GM's eagerness to hold market share.
'I don't think the market is about to fall flat on its face,' said George Magliano, auto industry analyst for WEFA Group in New York. 'But sales are being bought and pulled forward into the current months by bargains.'
Scott Merlis of Merlis Automotive International in Westport, Conn., said, 'GM has drawn a line in the sand. They want to be more competitive with marketing programs and keep their share above 30 percent.'
GM's market share slipped to 28.6 percent in February, barely 3.1 percentage points ahead of Ford. In February 1997, the gap was more than 5 percentage points.
GM's market share rebounded to 32.5 percent in March. But more trouble signs appeared last week. GM announced it will suspend production of the Chevrolet Blazer, GMC Jimmy and Oldsmobile Bravada at Moraine, Ohio, starting May 18 to bring down inventories, and Saturn was offering a subsidized lease. (See Saturn story, Page 8.)
Also, first-quarter incentive spending jumped well above last year. At GM, the figure was $1,305 per vehicle, a gain of $445.
The spending is 'a sign the market isn't as healthy as Detroit would like,' Magliano said.
Analyst Eric Goldstein of Bear Stearns in New York said the rebates are being caused by the usual suspects: excess plant capacity and a mature market, which has completely erased pent-up demand remaining from the last recession.
NO FORECAST CHANGE
Goldstein has no plans to change his company's sales forecast of 15 million light-duty vehicles for 1998, citing the healthy economy, low unemployment and a growth in personal incomes.
'The fundamentals of the industry are still strong,' he said.
Ford's loyalty coupons were in response to a GM customer loyalty rebate that began April 10, said Ford spokeswoman Joy Wolfe. Ford 'customer appreciation' certificates can be combined with any other existing incentive program.
Ford's coupons can be applied to the purchase or lease of a new 1997 or 1998 model, excluding popular vehicles such as the Ford Expedition, Lincoln Navigator and Ford Super Duty F series. The program began Friday, April 24, and continues through July 2.
Ford is mailing the coupons to original owners of 1991 and newer vehicles. But owners of older models through the 1986 model year can obtain the discount at a dealership by showing proof of original ownership, Wolfe said. Chrysler's program is broader; it includes 1999 model vehicles, and any original owner of a Chrysler vehicle is eligible.
Ford said it will not increase spending to conduct the program. Instead, marketing dollars have been shifted from other areas such as direct marketing and dealer incentives.
Rockville, Md., Ford dealer Donald Klimkiewicz has never seen an incentive offer like it.
'This is a monster program,' he said.
'Let's wait to see what happens,' he added. 'If this gets the job done, great. If not, they'll have to take another look.'
Staff Reporters Jim Henry and Mary Connelly contributed to this report
