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Ford offers $5-a-day lease deal
Ford Motor Co. fired back at General Motors Corp.'s latest incentive offer Tuesday with a twist on history: the $5-a-day lease.
As a tribute to company founder Henry Ford in the Dearborn automaker's centennial year, Ford is planning to offer leases on its Mustang coupe or Ranger Edge compact pickup for $5 a day.
Ford was credited with helping create the American consumer class in 1914, when he paid many of his autoworkers $5 a day -- enough to afford a new car.
On a day when automakers reported that March sales fell about half as much as expected, Ford and the Chrysler Group also countered GM's latest incentives, largely matching the giant automaker's offer of 5-year, no-interest loans.
Carmakers, not just the domestics, are scrambling to offer would-be customers prices they can't resist -- and to win over a bigger slice of the market.
GM announced its plan, which covers nearly every vehicle it makes, late Monday. Automakers said that the combination of big discounts, homeland security and spring weather should produce sales in April that would reach a 17 million or even 18 million annual pace.
Some Wall Street analysts are projecting an even better April than that.
Not that March was all that bad. March sales were at a pace that would produce about 16.2 million sales over the course of a year, according to AutoData Corp. in Woodcliff Lake, N.J.
That is down 3 percent from the 16.7 million pace of last March, but better than the 15.7 million pace most experts thought they were seeing through the month.
For Detroit's carmakers, sales were down -- with Ford off 7.8 percent, GM down 6.8 percent, and DaimlerChrysler down 6.5 percent.
Meanwhile, top Japanese rivals -- using more regional, rather than national, incentives -- actually sold more cars and trucks in the United States this March than they did a year earlier.
With customer cash or zero-percent loans available on some of the most popular and high-quality cars, such as the Toyota Camry and Corolla, Toyota Motor Corp. sales rose 5.1 percent in March.
Honda Motor Co. sales jumped 16 percent last month, behind deals such as 1.9-percent loans on the Civic sedan.
"When somebody with their reputation for being above the fray gets into it, it tells you something about the market," said John F. Smith, GM's group vice president for North American sales and marketing.
And what it says is that the market is very competitive, and that consumers will still respond to attractive offers.
Much of the feared "CNN effect" -- where consumers would presumably watch TV news rather than shop -- did not materialize, said GM sales analysis manager Paul Ballew. Ford also found sales surprisingly smooth over the course of the month.
The Chrysler Group actually found a reverse effect, said Gary Dilts, senior vice president for sales and marketing. Sales were slow in the first half of the month as consumers waited anxiously to see whether, when and how the war would begin.
"We had weather. We had war. We had worried consumers," he said.
But once the battles began -- and the stock market posted a huge Friday on March 21 -- consumers shook off the gloom and went shopping. Even when the market gave back those gains the next week, sales kept rolling through the last week and a half.
"It didn't necessarily make sense," Dilts said. "We think people were tired of sitting on the couch waiting for something to happen."
But something did happen, for those that were still waiting.
Late Monday, GM announced its latest promotion: "Zero to 60" provides 5-year, no-interest GM-backed loans to qualified customers on every 2003 GM model except Hummer -- even the Chevrolet Corvette. Or customers can choose a cash incentive of up to $3,000, depending on the model.
Analyst Ronald Tadross of Banc of America Securities argued that GM's new "Zero to 60" promotion is less generous than a similar offer in December that also included what he called "aggressive" dealer incentives.
"We think the latest zero-percent for 60 deal is a marketing scheme and a sign GM's truck sales are weak, and it's getting harder to raise incentives without hurting margins. This is our thesis and why we remain at a 'sell' on GM shares," he said in an e-mail to clients and reporters.
The new package may not be more generous, but with its straightforward message, it should send a clear signal to potential car buyers, Ballew said.
"The question is: Does it resonate better with consumers, in terms of simple and compelling?" he told Tadross, in a conference call.
The Chrysler Group quickly matched GM's offer, putting 5-year, no-interest loans on the popular PT Cruiser and other models.
Ford followed later in the day, with its "Centennial Lease" program and zero-percent loans on most vehicles -- many of them available for up to 5 years. Ford customers must make a 10-percent down payment and are limited to 12,000 miles a year on the 4-year Centennial Lease.
With competitors following GM's lead, April sales will likely run at a pace that would produce 18 million to 19 million sales over the course of a year, said analyst Scott Hill of Sanford C. Bernstein.
He recommends buying shares of GM and other auto stocks in anticipation of big gains when consumer and investor confidence rebounds as allied forces topple President Saddam Hussein's government in Iraq.
Automakers were more cautious, predicting an April sales pace of about 17 million new vehicles. Ford's sales analyst George Pipas said it could reach an 18-million pace.
For the year, GM is slightly lowering its estimate to about 16 million light vehicles. It is effectively projecting less of a "snapback" in the postwar economy, said Ballew, a former economist with the Federal Reserve.
Auto stocks were down early Tuesday, while the Dow Jones Industrial Average was way up. But by the end of the day, the Dow had gained 77 points and the carmakers were mixed.
Shares of Ford and DaimlerChrysler were down 4 cents each, closing at $7.48 and $29.27, respectively. GM shares gained 18 cents, or 0.5 percent to close at $33.80.
U.S. shares of Toyota gained 76 cents, or 1.7 percent, to close at $45.71, while Honda's U.S. shares gained 53 cents, or 3.2 percent, to close at $17.13.
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