DETROIT -- General Motors, facing near-record high inventories of unsold vehicles, on Tuesday raised its incentives to as much as $2,500 on most new 2005 models for consumers who finance through the automaker's credit arm.
In another escalation of Detroit's price war, GM offered "bonus cash" of between $500 and $1,500 on most 2004 and 2005 models financed through General Motors Acceptance Corp., GM spokeswoman Deborah Silverman said.
"For most people out there purchasing, they will have a comparable offer or a slightly better offer," Silverman said.
Last month, GM didn't offer any bonus cash, she said. Despite recent efforts to trim profit-eroding incentives, the offers have generally trended higher since GM launched its interest-free financing offer shortly after the Sept. 11 attacks in an effort to boost sales.
GM's U.S. sales tumbled more than 15 percent in June after the automaker tried to ease its incentives, raising its inventories of unsold vehicles to 1.3 million units. GM's sales hit their strongest levels of the year in July, and will help trim inventories to about 1.1 million units, Paul Ballew, GM's executive director of global market and industry analysis, said last week. But analysts said GM's July sales, to be released on Tuesday afternoon, will still fall from last year's strong levels.
Like its cross-town rival Ford Motor Co., GM has been struggling with an aging vehicle lineup, which requires more discounts to sell.
Analysts have said inventories will continue to pose a problem for GM, and will force the Detroit automaker to continue increasing incentives or cut production.
In addition to the bonus cash of up to $1,500, GM continued to offer a $1,000 cash rebate on most of its 2005 models, although a handful of models will have cash rebates of up to $3,000, Silverman said. Model year 2005 Cadillacs and Hummers have no cash rebate incentives, she added.
About 30 percent of consumers who finance a GM vehicle use GMAC, Silverman said.
The world's largest automaker also cut the basic cash rebate on most of its 2004 model cars and trucks by $500, to $3,500 and $4,500 respectively, Silverman said.
Customers financing their purchase of a 2004 model through GM's finance arm would also be eligible for an additional "bonus cash" offer of between $500 and $1,500, Silverman said.
The bonus cash program varies by region of the country and by model, she said. But in some cases, consumers could get a total cash rebate of up to $6,000 on vehicles from the 2004 model year.
Although interest rates have climbed in recent months, GM still offers zero percent financing on most of its 2004 model year vehicles. Interest rates on the 2005 models start at 1.9 percent for a three-year term.