GM Taunts Ford (F), Offers Free Financing
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Price: $77.64 +1.00%
Overall Analyst Rating:
SELL (= Flat)
Dividend Yield: 0.9%
EPS Growth %: +25.7%
Overall Analyst Rating:
SELL (= Flat)
Dividend Yield: 0.9%
EPS Growth %: +25.7%
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It appears that General Motors (NYSE: GM) is breaking promises made to investors mere months after its re-IPO.
In a recent Bloomberg article, just days following February auto sales results, the General appears to have turned to free financing on certain 2011 vehicles in order to keep their sales momentum going.
For example, the Chevy Impala will has free financing for 72-months; the Chevy Malibu, HHR wagon, Traverse SUV, and others, will have 60-months of free financing available (for qualified buyers, we assume).
The move comes as GM increased their incentives 12% from February 2010, to $3,732 per vehicle. The CEO of Edmunds.com agrees, saying that GM has been touting discipline with spending, and their actions have been in the complete opposite direction.
GM's move may also be aimed at instigating Ford Motor (NYSE: F) into increasing incentives and financing deals in order to draw away buyers.
Ironically, Ford's sales analyst recently said that the company boosted prices on vehicles by $700 to $800 per vehicle in February compared to January 2011.
Ford CEO Alan Mulally recently told Bloomberg that he wouldn't sacrifice market share for incentives, keeping the Blue Oval disciplined. One wonders how long that could last though, despite Ford coming in ahead of GM and other U.S. manufacturer Chrysler LLC in recent Consumer Report's rankings. Toyota, Honda (NYSE: HMC), and Subaru came in the top three for the third year in a row.
GM had a 20.8% market share in February (from 18.1% in February 2010), compared to 15.7% for Ford, and 14.3% at Toyota.
But money talks, and consumers may still be willing to sacrifice on quality in order to save a buck or two, especially with gas prices inflating at the pump, and employment still at the 9% level.
Both automakers are green in early trading today.
In a recent Bloomberg article, just days following February auto sales results, the General appears to have turned to free financing on certain 2011 vehicles in order to keep their sales momentum going.
For example, the Chevy Impala will has free financing for 72-months; the Chevy Malibu, HHR wagon, Traverse SUV, and others, will have 60-months of free financing available (for qualified buyers, we assume).
The move comes as GM increased their incentives 12% from February 2010, to $3,732 per vehicle. The CEO of Edmunds.com agrees, saying that GM has been touting discipline with spending, and their actions have been in the complete opposite direction.
GM's move may also be aimed at instigating Ford Motor (NYSE: F) into increasing incentives and financing deals in order to draw away buyers.
Ironically, Ford's sales analyst recently said that the company boosted prices on vehicles by $700 to $800 per vehicle in February compared to January 2011.
Ford CEO Alan Mulally recently told Bloomberg that he wouldn't sacrifice market share for incentives, keeping the Blue Oval disciplined. One wonders how long that could last though, despite Ford coming in ahead of GM and other U.S. manufacturer Chrysler LLC in recent Consumer Report's rankings. Toyota, Honda (NYSE: HMC), and Subaru came in the top three for the third year in a row.
GM had a 20.8% market share in February (from 18.1% in February 2010), compared to 15.7% for Ford, and 14.3% at Toyota.
But money talks, and consumers may still be willing to sacrifice on quality in order to save a buck or two, especially with gas prices inflating at the pump, and employment still at the 9% level.
Both automakers are green in early trading today.
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