DETROIT -- Ford Motor Co., following the lead of crosstown rival General Motors, announced on Wednesday that it was reviving interest-free loans to help bolster demand for many of its 2002 model cars and trucks.
The announcement came just one day after GM, the world's largest automaker, said it was reintroducing the "zero percent" financing deals that it used to prop up consumer confidence and lure customers into showrooms after the Sept. 11 attacks.
GM's latest move, which has intensified Detroit's already brutal price war, was matched on Tuesday by the Chrysler arm of DaimlerChrysler AG. Ford's decision to follow suit had been widely expected.
"One thing that's certain is that Ford will be competitive," Steve Lyons, a senior Ford executive, said in a statement. "As the competitive landscape changes, we will answer ."
GM eliminated its free financing deals in late April when industry sales were running stronger than expected, replacing them with increased cash rebates on a number of vehicles.
The return of the deals, amid growing uncertainty about the fledgling U.S. economic recovery, follows a drop in U.S. auto sales in May to a seasonally adjusted annual rate of 15.7 million vehicles, the slowest pace in nearly four years.
Results released on Tuesday showed June sales rebounded to a rate of 16.5 million vehicles. But GM was alone among Detroit's Big Three automakers in reporting a modest gain in sales compared with June 2001, and automakers clearly want some reassurance that American consumers will be willing to spend during the key summer selling season.
In addition to interest-free loans on many 2002 vehicles, Detroit's automakers are also offering hefty cash rebates on many models.
The incentives put the Big Three at a competitive disadvantage to Japanese, South Korean and many European automakers, which have managed to maintain sales with much lower marketing costs.
But Detroit executives argue that cheap loans and other deals, which are now averaging more than $2,200 per vehicle, are less expensive than the cost of idling assembly plants and laying off workers under generous North American labor contracts.
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