I know RP will debate this point, but although true GM went to 0% as an answer by the President to industry to keep the economy going, but I just wanted to post how well GM is doing in this age of 0%:

http://www.auto.com/industry/gm17_20030117.htm

"GM's profits for all of 2002 more than doubled those of 2001. The largest boost came from North America -- the world's largest auto market -- where GM profits doubled from $1.47 billion a year ago to $3 billion. The story in North America was a rapid rise in GM's U.S. truck and sport-utility vehicle sales, which were up 340,000 units from a year ago"

Bob Lutz pointed it out, a dealer at a local Chevy dealership seconded it, the news reported it, and unless there was a case of mass hypnosis in our sleep, every thread of evidence bears out 0% financing GM's SUV sales boom.

Again, going back to my initial topic starter, GM [B]is[/I] ingeniously using 0% financing to entice people into SUVs and Trucks, which although are the same price as some cars were before discounts, have a massively larger profit margin.

Really hate to say it RP, but on this one you seem to be wrong.

 

No. The original post made it seem as though GM was using 0%financing for the purpose of boosting SUV sales.

Red Planet said that the reason for 0% financing was a request by President Bush.

Boosted SUV sales may have been an unexpected outcome of 0% financing, but that's not the reason 0% financing was put into effect.

 

I'm a simple minded person and from what I've read, I think that if you have deeper pockets than your competition and can use them to frustrate the competition, I say use them to the max. That's what it looks like GM is doing with the 0% financing across the board. Ford and DCX can't sustain the continued competitiveness so they resort to finding lame criticism for GM's strategy, when in fact it's a successful one and is beating them. The 0% enticement probably cant last forever but for the next couple of months at least I think it still has steam. Regardless of what the original reasons were, 9/11 or otherwise, looks like it's still working, for now. If it ain't broke don't fix it.

 

There's no doubting what the current effects are... just look at the facts. Look at guionM's link above. The picture is very clear about what is happening NOW. GM is going like a barn on fire - at least truck-wise anyhow. Cars?

I think guionM, Z284ever, and certainly myself, are trying to conjure what MIGHT happen in the future because of what's happening now.

I could liken it to filling your tank, cranking your car, putting it in gear, and slamming the pedal to the floor and holding it there continuously. Sure, the rush is great, the speed is fun, and the car will do it... but for how long? Constantly treating your car this way is going to create you problems like mileage, wear, potential breakage, tickets, etc. So slam-it once in a while, but drive like everyone else does most of the time - "normally". IMO, GM paid for the gas, put it in gear, and has now had the pedal to the floor for 16 months... They have already passed everyone else on the road, but they aren't letting off the gas... is this a wise approach?

The jeopardies include lost car sales, car image, economic stability for the company as well as each model, and overall perception of the buying public. R377 covered the latter fairly well.

This may turn into one of the most successful business risks of the decade, but right now I see a big "bill to pay" for this party we're having. It's just hard to get something for nothing, you know?

 

Z284ever, guionM - we pretty much nailed it with our prior posts in this thread. KUDOS to you guys.

This may be a bit early, but it appears that the "Master of Incentives" is finding their pockets a little less deep than they thought. Don't get me wrong - they are not hurting at all, but they are now revising their earnings forecast downward due to incentives costs and world economic conditions.

Here's the story.

I actually had to look for this thread for a while, but it was worth finding. Go back and read some of the things we posted - and look at the dates!

 

I'm no brainiac on the matter, but I see incentives and 0% financing as the same thing, just expressed differently. Both are forms of discounting. I think that the attractiveness of 0% is driven by the close proximity market lending rates. Never before (in recent times) has the borrowing of money (for the short and long term) been cheaper. I figure that for the 25,000 car, a rebate of 2,500 is similar in value to a 0% financing of a car over 48 months. If the term of the borrow is 36 months then they are equal in payments. In cars with no incentives in the past, this discount financing will clearly create more sales.

R377 is right .... consumers have been conditioned to expect cheap money for financing .... I look for it ...

You may be interested in yesterday’s financial release located at:
The sales of GM defense side and activities of Hughes etc should be excluded from net income statements.


See GM latest financials at:

http://www.gm.com/company/investor_i..._res/index.htm

As of April 15th 2003
“GMAC
General Motors Acceptance Corporation (GMAC) reported record quarterly earnings in the first quarter of 2003, propelled by record performance at its mortgage operations.
“GMAC’s mortgage operations achieved truly exceptional results,” Wagoner said. “We are also pleased to see higher earnings in its financing business.”
GMAC earned $699 million in the first quarter of 2003, up nearly 60 percent from the $439 million a year ago. Earnings at the mortgage group rose to a record $371 million, more than double the $148 million recorded in the first quarter of 2002. The improvement reflects continued strong volumes at both the residential and commercial mortgage sectors.
GMAC’s financing operations also posted a strong performance with earnings of $302 million in the quarter, up $47 million from a year ago, reflecting higher asset levels and lower credit loss provisions. First quarter earnings at the insurance group were $26 million, down $10 million from a year ago. These results reflect a decline in the investment portfolio, which more than offset improved underwriting income.“



Ted

 

If you think about it, there are two groups of car customer out there that would buy new cars without incentives if they were offered products that they really wanted. Those two groups are performance/car enthusiasts and true-luxury car buyers. IMHO, these two groups of customers are neglected by GM. Other than the Corvette, there is nothing else for us performance/car enthusiasts. If luxury is what you want then why even consider Cadillac when you can have a BMW or a Mercedes?

The only way out of the incentives game, and to get people out of trucks and into cars, is to put the passion, performance, and excitement back into GM cars. Afterall, how can you get someone to pay over $20 grand for an Impala when they can get a bigger vehicle with a V-8 and RWD (or 4WD) in a full-size truck or SUV?

 

I totally agree with your first paragraph. I use to cruise the car lots on Sunday to look at what was there ... the managers and sales people all knew me. I was buying a new car every year Today .. there's nothing there that even interests me.

Just look at Pontiac's latest sales deliveries ... with a March S/D decrease in excess of 20% (over 2002). Over the last three months sales are down more than 11% (over 2002). If these figures were reported "Vibe Free" then march sales would be down 36.8% (over 2002) and the three month decline to almost 27%(over 2002).

Incentives aren't helping to sell the stale bread.

I'm leaning away from GM ... I can't wait until 2007 to get excited. Pontiac builds (yawn) excitement ....

Ted

 

I in turn 100% agree with your 2nd paragraph. If I were forced to buy a new vehicle today, the Mach1 Mustang is the top of the list. There isn't a single car from GM I'd buy today beyond the CTS 5 speed.

Next year you can add GTO to the list, but that's still only 2.

 

OK a small block GM motor, of which most LS1/LS6/Vortech engines go into vehicles with a bowtie on the grille!

guionM, A Mach 1, better off with the Cobra!
mach 1's can run like LS1's, 03 Cobra's can run like Vipers!

 

Agreed. If a person just has to buy one of the old body-style 'Stangs, the Cobra is the top pick. The Cobra has become an undeniably hot ride, while the Mach I is just a reinvention of the pre-2000 Cobra - not exactly supersonic.

Now that I think about it, the Mach I costs very nearly as much as the last of the normally aspirated Cobras, but is less of a car. If you're talking Mach I, the Dodge SRT-4 is very nearly at the same level of performance, with better seats and interior quality to boot.

 

How is the Mach 1 less of a car than the previous Cobras? No IRS? Whoopdeedoo. I think the Mach 1 has a lot more features (shaker/ram air hood, unique wheels and decals, unique interior, unique body addons) to differentiate it from the normal GT than the old Cobras did, plus it's running faster than the old Cobras.

The Neon SRT-4 is running a low 14, and the Mach 1 is running a mid-13 (LS1 speed)...so is the SRT-4 "nearly the same level" as an LS1 car, too? Better seats and interior quality on the Neon? I've been in neither car, but I'm pretty damned skeptical there.

 

A little off-subject, but I think guionM is right on the Mach1 choice for today's offerings. I've said before that's my choice as well - incentives or not.
Here's my thinking...
1)The car is about $7-8K LESS than the Cobra.
2)The car is already "sold-out" and will surely be collectible.
3)The performance is FAR better than GT, and only a tick below the Cobra in the 1/4 - in N/A trim too.

Now for personal reasons...
1)I think the car looks badassed - shaker, chin spoiler, black-outs... oh yeah.
2)The interior is a trip to me. Chrono guages, aluminum trim - all good in a musclecar.
3)The best "bang-for-the-buck" car going.

Gimme a Mach 1 and $3K for a Kenny Brown package, and I'll run your '03 Cobra - live axle or no. With a bulletproof bottom end and a 4V head - go iron lung or giggle gas and see what the Cobra's got for you...

Like it or not, I think the Mach 1 is about as close to an LS1 or WS6 type package as Mustang will ever offer. It's N/A. It's damn quick in the 1/4. 0-60 in 5.3 sec. It's fun factor is off the scale. AND IT"S WELL UNDER $30K. The Cobra's top speed or max HP rating isn't everything. F-bod owners should know...
I guess it boils down to personal taste and the $ you want to spend.

Motorweek just did a blip on the Mach 1 this weekend, and they said this was the one car that all of their test drivers got out of with a smile on their faces and had no real complaints about. MSRP $28,370 - as tested $28,665. They chastized the live axle too, but the subframe connectors, stiffer springs, and shocks made it handle infinitely better than the GT and almost on par with the '03 Cobra they tested a few months back! M-week QUOTE - "Despite the solid rear axle, our staff marveled at the Mach 1's composure. With firmer spring rates than the GT, the Mach 1 felt solid and refined, due in part to an old drag racer's trick of connecting the sub-frames with frame rail connectors. This further stiffens the unibody chassis and makes intricate suspension tuning possible. "

Link to Motorweek review of Mach 1.

BTW - they also did a 5-minute blip on the anniversary Vette on the same show.
Nice ride! $55,745 as tested --->

 

Maybe its just me, but the Mach I seems like a major step back from the Cobra. Sure there's the cost savings, but you could save another $8,000 by going for a Dodge SRT-4 instead. Now here's a car that isn't far off the Mach I's 0-60 and top speed numbers. You might even learn to enjoy torque steer.

I still think that the Cobra is the only one of the run-out Mustangs that's worthy of a purchase. Ford's finally built the ultimate Pony Car. Buying a lesser car, just to turn around and buy performance mods to gain Cobra performance back, is a waste of time.

 

OK - you make a very valid point about pure economics. The SRT-4 is much cheaper and does perform well - no question. There are also WRX's, EVO's, and SVT's out there for less money too.

But let's say you are into Cruise-in's or weekend Pony Trails...
Would you rather be seen idling thru a parking lot full of Mustangs and Camaro's in a Mach 1, or in an SRT-4? Can you do donuts til the tires blow in the SRT? Can you launch the SRT hard enough to put light between the front left tire and the ground? Can you throttle-steer the SRT through a sweeper?

THESE are the things that clinch the deal for the musclecar over the rice rockets. Trust me, I get my **** handed to me at every autox by rice - I know they are fast, sticky little turds and I know where they have the edge on me. But I also know where I OWN them... and to me, appearance is everything! Gimme the rumbling dual exhausts, thick meaty tires, 2 doors, and chrome Ray-Bans!

Don't get me wrong - I love the '03 Cobra to death! Heaven knows I've taken my lumps defending it in this forum alone!
In fact I expect that I'll end up with one in a few more years - as is my style, I'll wait for the depreciation to work out, then try to find a nice, well-kept used model for a decent price. It also gives time a chance to reveal shortcomings of the car, and give the aftermarket time to develop and prove the best enhancement packages.

All I'm saying is that for the money, the Mach 1 delivers a ton of what pony cars are meant to have. If I were not financially strapped to building my new shop this year, I'd be riding in a black-on-white '03 Mach 1 right now - I promise you. Next year... hmmmm... jump on the Mach, hit the '05 in June, or pine for the BOSS 302 that's still rumored...