Ford (F) is offering zero percent financing on a number of its 2007 cars and light trucks. So is GM (GM).
Not exactly a move from a position of strength. Since this set of incentives is new, it raises the question as to whether both companies are seeing sales slow enough to become really concerned. The US car market is flat this year, and Toyota (TM) keeps picking up market share. If the two big American car companies see that getting worse, they may do one of the things that has hurt their income in the past–increase incentives and hurt profit (or loss) per vehicle.
Detroit’s "damned if you do, damned if you don’t" problem with what it charges appears to still be with it. That means that all of the new models that the companies have produced are not clawing back enough sales from the Japanese to allow for rational pricing.
It is an early indicator of what is happening in Motown now, but it is not a good one.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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