Carmakers increase incentives in order to boost their sales

Article by Christian Andrei, on February 28, 2011

All that hard-won production and pricing discipline the auto industry has acquired in 2010 is in danger of “going out the window” now that incentives are ratcheting up. In January 2011, General Motors increased incentives and Hyundai, Nissan, Honda and Toyota followed in February 2011.

The danger: a return to the times when carmakers overbuilt and then had to bribe customers to buy. CEO of Hyundai Motor America John Krafcik calls it "a price war," while others merely see just the usual scuffling in a rough-and-tumble business.

Group 1 Automotive CEO Earl Hesterberg said, "You've got these powerful global companies and brands who are feeling their oats and have discovered they've survived the downturn."

Stever Girsky, vice chairman of General Motors, says his company has no reason to go overboard on incentives because it does not have enough production capacity.

At least, for now, most agree that the increased incentives don't signal a return to the over-produce-and-discount "push" pattern of the last decade. Inventories are scant and manufacturers are too pressured to increase profits, but production is picking up.

Forecaster IHS Automotive says manufacturers have just boosted plans for second-quarter North American production. In January 2011, IHS predicted output of 3.35 million light vehicles, up 8.5 percent from a year earlier and IHS just raised its forecast by 100,000 units, to 3.44 million. [via autonews - sub. required]

Topics: incentives

If you liked the article, share on:

Comments

Login or Create new account to add a comment!

Recommended

The Shooting Brake is probably the least rendered body shape in the automotive world. But it’s also the most sought after design among car nuts for its unique, old-fashioned charm....
by - January 23, 2017
Perhaps to make the upcoming Valentine’s day more special, Tinder dating app and Ford UK have cooked up a special blind date for all the single blokes and chicks in...
by - January 23, 2017
2017 is undeniably a very busy year for BMW. After introducing the new 4-Series, the German automaker has just released several new updates. In relation to this, BMW is also...
by - January 23, 2017
The renowned Shelby Super Snake is now 50 years old! As we greet the Super Snake a “happy birthday” or a “happy anniversary,” Shelby itself is celebrating half a century...
by - January 23, 2017
Nearly a year after the Subaru XV Concept was unveiled at the 2016 Geneva Motor Show in Switzerland, this SUV study is making its North American debut at the 2017...
by - January 23, 2017
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries