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

Nearly a decade after Opel and sister brand Vauxhall introduced the Insignia large family car, these companies are now getting ready to unveil the second generation of this offering from...
by - December 7, 2016
After we caught a glimpse of the revamped Amarok, VW Australia once again wants to give its ute a sinister look inspired by the Mad Max movie franchise. The “Korama”...
by - December 7, 2016
Customers in the European market are known for leaning towards style and with this in mind, Nissan has revealed the special LEAF Black Edition. While the production run of this...
by - December 7, 2016
When Volkswagen unveiled the VW Atlas, it declared that this SUV is being developed for the United States and is set to arrive as a 2018 model. It also unveiled...
by - December 7, 2016
Did you miss the opportunity to get a brand new Dodge Viper? Well, here’s something you don’t want to miss. Dodge has announced a “final call” for orders for its...
by - December 6, 2016
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