Volkswagen of America Inc. is offering a year of free car insurance to attract buyers who have grown bored with conventional sales incentives.
VW is conducting the pilot program, called "In the Car," from Jan. 4 through March 31 at its 43 dealerships in Illinois and Wisconsin. To qualify for the incentive, customers must buy or lease a new 2004 or 2005 Golf, New Beetle or New Beetle convertible.
The offer is open to licensed drivers in those states, even if they have infractions on their records.
Other automakers have offered buyers cash payments they could apply to insurance costs. But the VW program is the first offer of free, full coverage, the automaker says.
VW dealers say the plan's authors told them the incentive generally is worth $1,300 to $3,000. Program participants also remain eligible for low-interest financing on the vehicles, a VW spokesman says.
VW hopes the initiative will help boost its U.S. sales, which have plummeted since 2002. Its models are aging, and the automaker came late to the incentive wars. The insurance offer and the cars it applies to are designed to appeal to younger buyers.
Unlike 0 percent financing, the insurance incentive is not limited to the most creditworthy vehicle buyers. Unlike big cash rebates, the insurance program should have little impact on the residual values of the VW cars.
"We know that much of the market is being driven by whichever company offers the most cash," says Don Hughes, VWoA's Midwest regional manager. "With this program, we will keep the focus on the cars."