How GM can afford 0% financing. Pretty ingenious!
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The Mach 1's motor isn't nearly as bulletproof as the 03-04 Cobra DOHC 4.6, they don't have iron blocks, probably good for weight savings, and they don't have Manley rods and forged pistons, besides the compression is high so just "bolting on" a Kenne-Bell, is nice but the results won't be nearly as easy nor as good as with a new Cobra. I suppose its a toss up the Mach 1 needs a blower or spray and the Cobra needs a solid axle, but the Cobra has proven itself and the Mach 1 has yet to do so.
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Joined: Mar 2001
Posts: 13,713
From: The Golden State
Originally posted by guionM
An article appeared on Automotive News this week where Bob Lutz pointed out how 0% is fueling even bigger SUV sales. I dug around, and here's how GM can afford 0%.
Trucks and SUVs cost less to develop because of less severe safety and emission standards. Also, development cost are shared with Trucks that currently have astronomical production numbers.
Because of them being cheaper to produce and manufacture, Trucks & SUVs have huge profit margins, far and away bigger than cars.
As Mr Lutz pointed out this week, people going into showrooms to buy $25,000 Impalas, when faced with financing & discounts bringing Impalas down to $21,000, are going for SUVs at the $25,000 they intended to spend anyway (with no small help from your friendly, on commision salesman) that have also been discounted from say, 30 grand.
What this means simply put is that for that 25 grand, GM is clearing far more money then they would if it went towards a car, therefore, GM is actually making more money at 0% then they were without it!
On the upside, GM is making enough money to spend more on cars, which is good for us. On the downside, GM is basically encouraging people to buy more SUVs, and you will have armies of GM reps (RP among them) who will tout the flawed fact that this is what people want, and they are just giving people what they want.
What do you think about this?
An article appeared on Automotive News this week where Bob Lutz pointed out how 0% is fueling even bigger SUV sales. I dug around, and here's how GM can afford 0%.
Trucks and SUVs cost less to develop because of less severe safety and emission standards. Also, development cost are shared with Trucks that currently have astronomical production numbers.
Because of them being cheaper to produce and manufacture, Trucks & SUVs have huge profit margins, far and away bigger than cars.
As Mr Lutz pointed out this week, people going into showrooms to buy $25,000 Impalas, when faced with financing & discounts bringing Impalas down to $21,000, are going for SUVs at the $25,000 they intended to spend anyway (with no small help from your friendly, on commision salesman) that have also been discounted from say, 30 grand.
What this means simply put is that for that 25 grand, GM is clearing far more money then they would if it went towards a car, therefore, GM is actually making more money at 0% then they were without it!
On the upside, GM is making enough money to spend more on cars, which is good for us. On the downside, GM is basically encouraging people to buy more SUVs, and you will have armies of GM reps (RP among them) who will tout the flawed fact that this is what people want, and they are just giving people what they want.
What do you think about this?
Originally posted by Red Planet
uhhhhhhhhhmmmmmmmmmm, no.
(and the following can be verified in a lengthy article in the wall street journal......)
Remember September 11? (as if anyone could forget?) Remember what happened to wall street?
President Bush contacted our chairman a few days later -- to talk about what could possibly be done in order to save the economy from crashing...........
The result? GM announced -- across the board -- (including Corvette which needed no incentive) 0% financing.
The problem with incentives is this: once on them, how do you get off them?
Did GM really want to spend all that money on Zero financing? No, not really -- but I think you will all agree that there was a lot at stake (just as there is today....) Fact: GM has to raise money on the open market to fuel GMAC..............it isn't sitting in a vault at GM Headquarters.....
Now...I suppose we could take the incentives off the SUVs...but what do you think will happen? (other than a whole bunch of people are going to see pink slips..and that isn't just those in the assembly plants....it's tens of thousands of other workers who supply GM plants........) I guarantee you GM sales will fall.......
You REALLY want to stop the sales of SUVs? (and this is NOT a GM opinion...it is a personal one.....) Raise the price of gasoline to $3 a gallon.....that'll stop the sales of SUVs...but I shudder to think of what will happen to further deteriorate the economy..
uhhhhhhhhhmmmmmmmmmm, no.
(and the following can be verified in a lengthy article in the wall street journal......)
Remember September 11? (as if anyone could forget?) Remember what happened to wall street?
President Bush contacted our chairman a few days later -- to talk about what could possibly be done in order to save the economy from crashing...........
The result? GM announced -- across the board -- (including Corvette which needed no incentive) 0% financing.
The problem with incentives is this: once on them, how do you get off them?
Did GM really want to spend all that money on Zero financing? No, not really -- but I think you will all agree that there was a lot at stake (just as there is today....) Fact: GM has to raise money on the open market to fuel GMAC..............it isn't sitting in a vault at GM Headquarters.....
Now...I suppose we could take the incentives off the SUVs...but what do you think will happen? (other than a whole bunch of people are going to see pink slips..and that isn't just those in the assembly plants....it's tens of thousands of other workers who supply GM plants........) I guarantee you GM sales will fall.......
You REALLY want to stop the sales of SUVs? (and this is NOT a GM opinion...it is a personal one.....) Raise the price of gasoline to $3 a gallon.....that'll stop the sales of SUVs...but I shudder to think of what will happen to further deteriorate the economy..
By DAVE GUILFORD | Automotive News
DETROIT - To understand why General Motors started its sweeping "Zero to Sixty" incentive program, look no further than the automaker's light-truck sales.
In the first quarter of this year, GM light-truck sales dropped 14.8 percent. GM sold nearly 100,000 fewer of its main profit-making vehicles.
The drop-off was especially tough in full-sized trucks. The Chevrolet Silverado pickup was off by 28,839 units. Chevrolet Tahoe sales fell by 14,200.
For contrast, GM's car lineup only sagged 3.3 percent in the first quarter.
GM executives say the incentive program, which offers 0 percent financing for 60-month loans, is reviving light-truck sales. GM believes it is emerging from the slump it says resulted mainly from its year-end incentives splurge.
Paul Ballew, GM's executive director of market and industry analysis, says light-truck sales gained strength in early April. GM's incentives increase truck sales disproportionately because trucks are the strongest part of its vehicle lineup, he says. "It's fair to say that we get a little bit more bite on the truck side than the car side."
Also, the offer, which lasts through April 30, offers interest-free five-year loans on full-sized trucks for the first time, he says.
GM blames the truck decline on pull-forward sales it gained in its extremely strong December, when it hit a 32.5 percent overall market share and a 37.1 percent light-truck share. For example, in December, GM sold about 61,000 full-sized SUVs, compared with a typical month of about 35,000, Ballew says.
The December truck surge helps explain why truck sales declined more steeply than car sales in the first quarter. In December, GM car sales were up 41,467 units over December 2001, but truck sales soared by 69,403 units.
Analyst Brett Hoselton of McDonald Investments in Cleveland says there is little question that GM spent the first two months of this year with a low-sales hangover from the strong December.
Jeff Schuster, director of North American forecasting at J.D. Power and Associates, says GM was less aggressive with incentives in January and February after posting huge numbers in December, seeming to wait out the pull-forward aftermath. But GM has trained buyers to hold out until the next big offer, he says. "It's really just showing the consumer's willingness to wait for the next incentive."
Ballew says several trends are changing the light-truck landscape. Some buyers of large SUVs are migrating to the increased selection of large luxury SUVs. So some lost Suburban buyers may have contributed to increased first-quarter sales of the Hummer H2 or the Cadillac Escalade, he says.
Although GM's first-quarter decline was worse than that of key competitors (see box), GM still led its nearest rival in light-truck sales, Ford Motor Co., by 46,830 units. Ballew expects GM to begin making up for the slow first quarter in April and to finish the year with sales comparable with 2002.
"We're going to do our 500,000 large utilities," he says. "We're going to do our 900,000 large pickups."
I'm not going to say another word about all this.
Last edited by guionM; Apr 22, 2003 at 10:57 AM.
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Joined: Mar 2002
Posts: 3,180
From: Yadkinville, NC USA
[QUOTE]Originally posted by guionM I'm not going to say another word about all this. QUOTE]
Nice find guionM!
My favorite is the line about "GM has trained buyers to hold out until the next big offer". That is EXACTLY what Z284ever, you, and myself were trying to point out a few months back. Now it's been said by a GM insider too.
The other aspect to this - not yet touched on - is that poeple tend to draw a mental image of a car "on sale" being a "cheap" car, and therefore less desireable. It may not be deserved, but people's minds don't always follow convention or reasoning. People think,"It's always on sale, there must be something wrong with them or they wouldn't be trying to move them so hard." The public perception that the entire line is "cheap" could be very detrimental to sales too, regardless of incentives.
Again, GM edged out Ford in total units sold, but Ford kept relatively competitive and high numbers without incentives! I know for a fact that the local Ford dealer won't give a cent on the Superduty pickups, and they don't have an '03 Powerstroke on the lot! My buddy just ended up in a Toyota Tundra because of their (Ford's) lack of wiilingness to "deal" with him.
But they are going to sell 500K large SUVs and 900K large trucks - no matter what... what determination!
QUOTE] Nice find guionM!
My favorite is the line about "GM has trained buyers to hold out until the next big offer". That is EXACTLY what Z284ever, you, and myself were trying to point out a few months back. Now it's been said by a GM insider too.
The other aspect to this - not yet touched on - is that poeple tend to draw a mental image of a car "on sale" being a "cheap" car, and therefore less desireable. It may not be deserved, but people's minds don't always follow convention or reasoning. People think,"It's always on sale, there must be something wrong with them or they wouldn't be trying to move them so hard." The public perception that the entire line is "cheap" could be very detrimental to sales too, regardless of incentives.
Again, GM edged out Ford in total units sold, but Ford kept relatively competitive and high numbers without incentives! I know for a fact that the local Ford dealer won't give a cent on the Superduty pickups, and they don't have an '03 Powerstroke on the lot! My buddy just ended up in a Toyota Tundra because of their (Ford's) lack of wiilingness to "deal" with him.
But they are going to sell 500K large SUVs and 900K large trucks - no matter what... what determination!
Thread Starter
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Joined: Mar 2001
Posts: 13,713
From: The Golden State
Originally posted by ProudPony
...Again, GM edged out Ford in total units sold, but Ford kept relatively competitive and high numbers without incentives! I know for a fact that the local Ford dealer won't give a cent on the Superduty pickups, and they don't have an '03 Powerstroke on the lot! My buddy just ended up in a Toyota Tundra because of their (Ford's) lack of wiilingness to "deal" with him.
But they are going to sell 500K large SUVs and 900K large trucks - no matter what... what determination!
...Again, GM edged out Ford in total units sold, but Ford kept relatively competitive and high numbers without incentives! I know for a fact that the local Ford dealer won't give a cent on the Superduty pickups, and they don't have an '03 Powerstroke on the lot! My buddy just ended up in a Toyota Tundra because of their (Ford's) lack of wiilingness to "deal" with him.
But they are going to sell 500K large SUVs and 900K large trucks - no matter what... what determination!
Ya know.....
It's very ironic you mention how GM edged out Ford in total units sold.....
Ford comeback gains momentum
$896 million first-quarter profit gives automaker credibility
By Mark Truby / The Detroit News
NEW YORK -- After two brutal years of financial losses and management turmoil, Ford Motor Co.'s comeback bid is finally picking up steam.
By posting strong profits of $896 million in the first quarter, Ford surpassed Wall Street's expectations. And the company is starting to make believers out of critics who scoffed at its chances to get solidly in the black again after losing $6.4 billion in 2001 and 2002.
Ford's beaten-down shares surged Wednesday, rising 88 cents or 10.54 percent to close at $9.23 in heavy New York Stock Exchange trading.
Chairman and CEO Bill Ford Jr. delivered the good financial news to hundreds of cheering employees in a town hall style meeting Wednesday at Ford headquarters in Dearborn.
"My message was that we have a long way to go, but let's take today and enjoy it," he told The Detroit News in an interview Wednesday. "I'm very proud and happy that we are delivering on our promise." ....
..."Ford is holding the line on vehicle price more successfully than GM," Lapidus wrote in a note to clients Wednesday. "High customer loyalty, superior pricing tools and a high profit focus may be making the difference for Ford."...
...Even as industry sales cooled, Ford's U.S. market share rose to 21.2 percent in the first quarter from 20.7 percent a year ago. GM's U.S. market share in the first quarter, meanwhile, fell to 26.6 percent from 28.2 percent a year earlier, and 29.2 percent in the last quarter of 2002.
"We keep telling people we are going to gain share, and nobody believes us," Ford Division President Steve Lyons said in an interview....
$896 million first-quarter profit gives automaker credibility
By Mark Truby / The Detroit News
NEW YORK -- After two brutal years of financial losses and management turmoil, Ford Motor Co.'s comeback bid is finally picking up steam.
By posting strong profits of $896 million in the first quarter, Ford surpassed Wall Street's expectations. And the company is starting to make believers out of critics who scoffed at its chances to get solidly in the black again after losing $6.4 billion in 2001 and 2002.
Ford's beaten-down shares surged Wednesday, rising 88 cents or 10.54 percent to close at $9.23 in heavy New York Stock Exchange trading.
Chairman and CEO Bill Ford Jr. delivered the good financial news to hundreds of cheering employees in a town hall style meeting Wednesday at Ford headquarters in Dearborn.
"My message was that we have a long way to go, but let's take today and enjoy it," he told The Detroit News in an interview Wednesday. "I'm very proud and happy that we are delivering on our promise." ....
..."Ford is holding the line on vehicle price more successfully than GM," Lapidus wrote in a note to clients Wednesday. "High customer loyalty, superior pricing tools and a high profit focus may be making the difference for Ford."...
...Even as industry sales cooled, Ford's U.S. market share rose to 21.2 percent in the first quarter from 20.7 percent a year ago. GM's U.S. market share in the first quarter, meanwhile, fell to 26.6 percent from 28.2 percent a year earlier, and 29.2 percent in the last quarter of 2002.
"We keep telling people we are going to gain share, and nobody believes us," Ford Division President Steve Lyons said in an interview....
Though I still think Ford's marketing and pricing guys have serious mental problems regarding how they have ran the Thunderbird, Maurader, and the Lincoln LS V8 programs, it still shows that GM's incentives (regardless as to how it's being presented) is nothing more than a ploy to move more trucks & SUVs, and is completely unnecessary to the extent that GM is going with it.
By the way, on another subject, the article also mentions the return of the Lincoln Continental AND a NEW RWD sedan!
http://www.detnews.com/2003/autosins...a01-139936.htm
Last edited by guionM; Apr 22, 2003 at 02:59 PM.
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Joined: Jul 1998
Posts: 253
From: New Jersey
Whatever their motives, GM got my business. 
I've been shopping for a replacement for my wife's '96 Tahoe for a few months. Initially, I was shopping for Expy's, with the standard 3rd row seat. We're having a 3rd child, and after some discussion, we decided that an Excursion or Suburban/Yukon XL would be a better alternative. After driving the Excursion and deciding that it was just too damn big, I started shopping for Suburban LT's or Yukon XL SLT's.
On Friday, I brought home a brand spankin' new '03 Suburban Z71. It's Dark Green Metallic with neutral leather...loaded...roof, XM radio, On-Star, side airbags, dual power/heated/memory seats, etc., etc. I got it for 0% financing and with a nice chunk down, my payments are pretty reasonable. It's sure nice to sit in the finance office at the dealer and see the financing paperwork with the phrase "Amount you paid for this credit...$0.00".
S.
I've been shopping for a replacement for my wife's '96 Tahoe for a few months. Initially, I was shopping for Expy's, with the standard 3rd row seat. We're having a 3rd child, and after some discussion, we decided that an Excursion or Suburban/Yukon XL would be a better alternative. After driving the Excursion and deciding that it was just too damn big, I started shopping for Suburban LT's or Yukon XL SLT's.
On Friday, I brought home a brand spankin' new '03 Suburban Z71. It's Dark Green Metallic with neutral leather...loaded...roof, XM radio, On-Star, side airbags, dual power/heated/memory seats, etc., etc. I got it for 0% financing and with a nice chunk down, my payments are pretty reasonable. It's sure nice to sit in the finance office at the dealer and see the financing paperwork with the phrase "Amount you paid for this credit...$0.00".
S.
Registered User
Joined: Dec 1998
Posts: 472
From: Texarkana, Tx
hmmm, no incentives here....
FORD DIVISION
NATIONAL RETAIL INCENTIVES
Ends June 4th, 2003
2003 Model Customer Cash OR Financing Rates
(36-/48-/60-/72-Month)
ZX2 $2,000 0.0% / 0.0% / 0.9% / 2.9%
Focus (excl. SVT) $2,000 0.0% / 0.0% / 1.9% / 3.9%
Focus SVT 2.9% / 3.9% / 4.9% / 6.9%
Mustang
(excl. SVT and Mach 1) $3,000 0.0% / 2.9% / 3.9% / 5.9%
Crown Victoria $3,000 0.0% / 0.0% / 0.0% / 1.9%
Taurus $3,000 0.0% / 0.0% / 0.0% / 1.9%
Windstar $3,000 0.0% / 0.0% / 0.0% / 1.9%
Ranger $3,000 0.0% / 0.0% / 0.0% / 1.9%
F-150
(excl. SuperCrew and Lightning) $3,000 0.0% / 0.0% / 0.0% / 1.9%
F-150 SuperCrew
(excl. Harley-Davidson) $2,500 0.0% / 1.9% / 2.9% / 4.9%
F-Series Super Duty
(excl. 6.0L and 7.3L) $2,500 0.0% / 1.9% / 2.9% / 4.9%
F-Series Super Duty 6.0L $1,000 Standard Rates
F-Series Super Duty 7.3L $2,000 0.0% / 1.9% / 2.9% / 4.9%/
E-Series Van/Wagon $3,000 0.0% / 0.0% / 0.0% / 1.9%
Escape $1,500 0.0% / 2.9% / 3.9% / 5.9%
Explorer Sport (2-door) $3,000 0.0% / 0.0% / 0.0% / 1.9%
Explorer (4–door) $3,000 0.0% / 0.0% / 0.0% / 1.9%
Explorer Sport Trac $3,000 0.0% / 0.0% / 0.0% / 1.9%
Expedition $3,000 0.0% / 0.0% / 0.0% / 1.9%
Excursion (Excl. 6.0L) $4,000 0.0% / 0.0% / 0.0% / 1.9%
Excursion 6.0L $2,000 Standard Rates
FORD DIVISION
NATIONAL RETAIL INCENTIVES
Ends June 4th, 2003
2003 Model Customer Cash OR Financing Rates
(36-/48-/60-/72-Month)
ZX2 $2,000 0.0% / 0.0% / 0.9% / 2.9%
Focus (excl. SVT) $2,000 0.0% / 0.0% / 1.9% / 3.9%
Focus SVT 2.9% / 3.9% / 4.9% / 6.9%
Mustang
(excl. SVT and Mach 1) $3,000 0.0% / 2.9% / 3.9% / 5.9%
Crown Victoria $3,000 0.0% / 0.0% / 0.0% / 1.9%
Taurus $3,000 0.0% / 0.0% / 0.0% / 1.9%
Windstar $3,000 0.0% / 0.0% / 0.0% / 1.9%
Ranger $3,000 0.0% / 0.0% / 0.0% / 1.9%
F-150
(excl. SuperCrew and Lightning) $3,000 0.0% / 0.0% / 0.0% / 1.9%
F-150 SuperCrew
(excl. Harley-Davidson) $2,500 0.0% / 1.9% / 2.9% / 4.9%
F-Series Super Duty
(excl. 6.0L and 7.3L) $2,500 0.0% / 1.9% / 2.9% / 4.9%
F-Series Super Duty 6.0L $1,000 Standard Rates
F-Series Super Duty 7.3L $2,000 0.0% / 1.9% / 2.9% / 4.9%/
E-Series Van/Wagon $3,000 0.0% / 0.0% / 0.0% / 1.9%
Escape $1,500 0.0% / 2.9% / 3.9% / 5.9%
Explorer Sport (2-door) $3,000 0.0% / 0.0% / 0.0% / 1.9%
Explorer (4–door) $3,000 0.0% / 0.0% / 0.0% / 1.9%
Explorer Sport Trac $3,000 0.0% / 0.0% / 0.0% / 1.9%
Expedition $3,000 0.0% / 0.0% / 0.0% / 1.9%
Excursion (Excl. 6.0L) $4,000 0.0% / 0.0% / 0.0% / 1.9%
Excursion 6.0L $2,000 Standard Rates
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