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0% Financing Spreads Like Wildfire Through Auto Industry
There was a time when 0% financing for new cars and trucks was a U.S. market-share bludgeon wielded solely by the Big Three. How things have changed. While the frozen credit markets are forcing domestic automakers to compete in "The $25 Billion Pyramid," the tanking economy has sent the zeroes everywhere.

Mazda is offering "Mazdanomics" -- 0% for 36 months -- and Toyota is for the first time doing a national 0% financing event, "Saved by Zero," as is Nissan with "Nissan Delivers." Volkswagen has "Sign then Drive," offering $0 at signing, $0 down and $0 for the first month. Even BMW is offering 0.9% on some vehicles.

Among domestics, GM has a "Red Tag Event" offering a range of cross-brand deals. Chrysler LLC, which ended its leasing program in August, is offering 0% and cash back. And now Ford is hoping to do 0% one better. Ford's "Employee Pricing Plus" event adds frosting to the employee-discount pricing cake with up to $6,000 cash back -- or, for vehicles that Ford deems its most fuel-efficient, 0% financing for 36 months.

Specifically, Ford says customers who buy Ford Focus, Fusion, Escape, Flex and F-150 pickup; Mercury Milan, and Mariner; and Lincoln MKZ and MKS cars will get the 0% financing deal through Ford Credit for 36 months on top of the employee-pricing discount (although the F-150 is excluded from the Employee Pricing part of the equation.)

The Dearborn, Mich. automaker is joining the chorus of TV incentive advertising with a raft of national and Tier II dealer-group ads via JWT/Team Detroit, directing consumers to www.FordEmployeePricingPlus.com. The ads are vehicle-specific, and spotlight fuel efficiency. For example, one mentions that consumers "pay what we pay" plus get $2,500 cash back on the 29-mpg Ford Fusion.

"Incentives are at record levels for the entire industry," says Jesse Toprak, chief auto industry analyst at Edmunds.com. "Particularly for trucks and SUVs." He says the key in this kind of struggle is merely standing out.

"What message resonates with the consumers, and not only sets you apart but also brings people to showrooms? I think all of the programs ranging from employee to zero-percent to rebates are helpful to a certain extent, but not the magic solution," he says. "They bring an incremental benefit in terms of sales to automakers, but they are temporary injections that can't be long-term solutions."

Toprak says Smart ForTwo, Mini and Scion are doing the least incentive spending. Mazda -- which launched "Mazdanomics" this month -- was among the lowest through the end of October, as well as Honda, which even now is spending only an average of $907 per vehicle on incentives.

He adds that Volkswagen is also spending very little on incentives versus the other European brands.

(Source: Marketing Daily, 11/21/08)
 
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