Wait, what the heck is this? General Motors (NYSE:GM) says it will once again be offering 0% financing or rebates on most of its new vehicles. The question is: Why?
Just four months ago, CEO Rick Wagoner told The Wall Street Journal that he hopes as the U.S. economy strengthens, "maybe we get some easing off of incentives." GM, Ford (NYSE:F), and DaimlerChrysler (NYSE:DCX) have been taking part in these Car Wars for more than two years now. But although the consumer-friendly incentives led to some record sales levels, not much -- if any -- of that extra revenue trickled down to the bottom line because of the cost of the programs.
Yet, GM is the one who keeps pushing these incentives, much to the chagrin of its domestic rivals. A Ford spokesman calls it "throwing good money after bad." It should be interesting to see if the other two of the Big Three will once again be forced to match GM's offer.
No matter how you slice it, the 0% program -- combined with the company's decision to give away 1,000 cars over the next few weeks -- is not an encouraging sign. According to Wagoner himself, the alternative to these incentives may be "closing plants and not selling cars."
Does this newest round of giveaways, which lasts until March 31, mean you should consider a new car buy? Probably not. You can learn why in The Pitfalls of 0% Financing.
