General Motors and Ford Motor Co., battling sharp declines in U.S. sales,followed Asian rival Hyundai Motor and offered to make car payments for buyers who lose their jobs.
GM said it would provide payment protection for two years as part of its GM Total Confidence program. The company will cover up to nine vehicle payments of up to $500 a month for new-vehicle buyers.
Earlier Tuesday, Ford unveiled the Ford Advantage Plan, which will cover payments for up to 12 months.
The efforts are aimed at easing buyers concerns as the U.S. recession stretches into its 16th month. GMs U.S. sales have fallen 51.1 percent this year through February, and Fords are down 45.9 percent from year-earlier levels.
Industrywide U.S. sales have fallen 39.4 percent this year. Analysts expect a similar decline when March results are announced tomorrow.
Following Hyundais lead
Hyundai Motor America, which introduced its Hyundai Assurance plan in January, has posted a 4.9 percent sales increase. Initially, Hyundai allowed customers to return vehicles without damaging their credit. Since then, the automaker temporarily expanded the program to include up to three months of payments.
The original Hyundai Assurance program runs through the end of the year and might be continued if economic conditions have not improved, said Hyundai spokesman Chris Hosford,
The expanded program, Hyundai Assurance Plus, covers three months of car payments for leases and loans. That program is scheduled to end April 30, but may be continued, said Hosford.
We expected some competitors to follow. We have been looking at several different options, but no decisions have been made in that regard, Hosford said.
Analysts say the GM and Ford programs will resonate with customers more than the predictable types of incentives now offered.
Hyundai has had great success getting buyers into showrooms with this kind of message, and it is certainly not unusual for automakers to copy each others successful strategies, Edmunds AutoObserver.com Editor Michelle Krebs said in a statement.
Now, the pressure is on the other imports that have been watching Hyundais success and now are seeing Ford and GM rising to the occasion.