Lock 'n' Roll has few takers

GM incentive not a powerful draw
November 27, 2004

BY SARAH A. WEBSTER
FREE PRESS BUSINESS WRITER


General Motors Corp.'s Lock 'n' Roll incentive program was a hook many consumers left dangling in the market without a bite this month, dealerships and auto analysts reported.

The automaker's creative incentive program allowed consumers to lock in a low interest rate on a new 2005 GM vehicle and a future vehicle for up to 10 years. The deal was designed to increase showroom traffic and improve sales. But with a few days left to close out the month, dealers were reporting that the response to the program has been lukewarm.

That may have contributed to GM's decision to begin offering 0-percent interest rates on 72-month loans for 2004 vehicles in the middle of the month. GM pitched essentially the same offer in a 72-hour sale at the end of September to clear out 2004 inventory. Dealers said that sale was a slam-dunk. It drew droves of potential buyers into showrooms and caused new vehicle sales to surge to 1.4 million in September.

So with Lock 'n' Roll not gaining much traction, and many old model-year vehicles still sitting on dealer lots, GM pulled that tried-and-true incentive program back out of its hat.

It began offering long-term no-interest loans again Nov. 19 through the end of the month.

Chris Hemmersmeier, executive general manager of Jerry Seiner Dealerships in Salt Lake City, which sells mostly GM products, said the Lock 'n' Roll program has been difficult to market to consumers, even though he believes it offers an important value.

"Lock 'n' Roll has been OK but not as good as we anticipated," Hemmersmeier said.

Joseph Serra, president of Serra Automotive in Grand Blanc, the owner of 16 dealerships nationwide, echoed that sentiment.

"I think it's fair. It's not going as well as I think they thought" it would, he said. "The current program has had some impact for us -- not to the level I was originally hoping, but it has been positive."

GM and other automakers are to report their monthly sales results on Wednesday.

Deborah Silverman, a GM spokeswoman, said the automaker would not be able to say how well its programs performed until the end of the month because a lot of auto sales are finalized in the last few days. She also noted that the Thanksgiving weekend usually provides a sales boost.

But some analysts already concluded Lock 'n' Roll didn't inspire consumers.

"We don't think it's been very effective," said John Casesa, an auto analyst with Merrill Lynch & Co. in New York.

David Healy, an auto analyst with Burnham Investment Research, agreed. "The average car buyer has difficulty seeing through the middle of next week," he said. "Who knows if I'm going to buy another GM car in three to seven years anyway?"

In fact, Casesa and Healy expect sales to decline for the world's largest automaker in November, probably about 5 percent or so, compared to a year ago -- largely because GM's performance last November was so strong. A sales decline will likely translate into a market share loss for GM.

Consequently, both analysts expect industrywide sales in November to be about the same as a year ago, when automakers sold about 1.3 million new cars and trucks in the United States.

Healy expects sales for Ford Motor Co. and DaimlerChrysler AG's Chrysler Group to be up slightly, largely on the strength of their new models. Ford unveiled the Five Hundred sedan and Freestyle crossover recently, while Chrysler is still riding on the strength of its hit 300 sedan.

Interestingly, neither automaker reacted to GM's Lock 'n' Roll, as the crosstown rivals normally do when GM unveils a new incentive program.

With lackluster November sales expected, Casesa also thinks the month will end with inventories about 13 percent above normal historic levels.