GM offers 6-year, no interest loans
Promotion to clear out backlog of some models. Price increases for some 2009 models announced.
NEW YORK (CNNMoney.com) -- General Motors will offer large financing incentives to clear out a backlog of 2008 model year vehicles, the nation's No. 1 automaker said Monday.
GM also announced it is cutting production of trucks and SUVs through the end of the year. Sales of large pick-up trucks and SUVs have been down sharply this year as gas prices have risen and the economy has slowed.
The company also announced it has engaged Citibank to help with a previously announced strategic review of the company's Hummer SUV brand.
Citibank will help GM assess possible offers to purchase the brand from GM, said Mark LaNeve, GM's vice-president for marketing in a conference call. Citibank will also help GM assess other options for Hummer, including a possible revamp of the brand's model line-up.
The carmaker will offer 0% financing for loans as long as six years on most of its 2008 models. Vehicles included in the program range from large SUVs such as the Chevrolet Suburban to small two-seat sports cars like the Pontiac Solstice.
The promotional program - which will only be available from Tuesday through next Monday, June 30 - will be called the "72-hour sale," the company said.
"We're really trying to spark the market here at the end of the quarter," LaNeve said.
The name of the promotional program comes from the number of hours the typical dealership will actually be open for business during that time.
GM's most popular newly introduced or redesigned models are not included in the promotion. Customers will not get 0% financing on the Chevrolet Malibu and Cadillac CTS sedans or on the company's new three-row crossover SUVs. Hybrid vehicles and other models that are already selling well are also not included in the offer.
For customers financing $30,000 on a new vehicle purchase, 0% financing would be worth almost $8,000 compared to current rates, said Jesse Toprak, an analyst with the automotive Web site Edmunds.com.
Car companies usually offer 0% financing incentives for shorter loans, said Toprak, but six-year 0% financing programs are not unheard of. Because of the expense of forgoing interest payments for so long, deals like this are usually available for short periods of time, Toprak said.
Customers trading in a GM car or truck they now own who forgo the financing offer may be eligible for cash incentives that could total as much $7,000 on some vehicles if they're combined with existing programs.
"We feel this an absolute screaming deal that we hope will spark some traffic and some momentum," said LaNeve.
GM hopes to clear out an inventory that, while low by historic standards, LaNeve said, is now skewed toward large trucks and SUVs because those vehicles have been selling slowly.
The company also announced further production cutbacks for large trucks and SUVs and moves to increase production for cars and more fuel-efficient crossover SUVs.
"We keep cutting to what we think the market will be for the balance of the year," LaNeve said.
The company is still hoping for an improved market in the second half of the year, LaNeve said, as GM's 2009 models enter dealerships. But he admitted that the company had been overly optimistic about this year already.
"Up through the election, you're going to have a lot of consumer confidence issues," he said.
For the 2009 model year, GM said almost all car and truck models will have higher sticker prices. The average increase will be a little more than $1,000, or 3.5% of the current price.
The price increases are intended to cover GM's increased material costs as well as the cost of new fuel-saving technology and added vehicle features, the company said.
LaNeve also cited quality improvements in GM vehicles that, he said, warranted higher prices.
LaNeve would not comment on the future of the Hummer brand except to say that GM is exploring all options. He declined to say when a decision on the brand could be reached.
No other brand cuts are being considered, he said.