GM's Big Financing Spiff Makes an Impact

GM's Big Financing Spiff Makes an Impact

By Bill Visnic

Zero-percent financing deals aren't anything new to the industry, but General Motors Corp.'s latest riff on that old tune appears so far to have generated some success, even in these most desperate of times for auto sales.

According to exclusive data from Edmunds.com, sales of select GM vehicles -- mostly trucks -- may have enjoyed a shot in the arm from the zero-percent-for-up-to-72-months spiff, which originally was supposed to run only for the final week of June, but GM not unexpectedly extended through the July 4 holiday weekend.

A study of visitor "consideration" at Edmunds.com shows that consideration for certain vehicles markedly increased, week-over-week, from the week of June 16, before the GM incentive was announced, and the week ending June 29, the original date the 72-month, zero-percent financing deal was to have finished. Consideration is measured by the number of visits to a Vehicle Detail Page for a specific GM model.

Most of the vehicles showing large increases in consideration were large SUVs and pickups. And the GM division that appears to so far have benefited most from the event: Pontiac.

The Edmunds data show the largest gainer was the GMC Yukon, which posted a 59 percent jump in consideration, followed closely by the Chevrolet Suburban at 58 percent. It might be surmised that these are vehicles large families must purchase regardless of the poor fuel economy they deliver -- so the attractive financing deal indeed provided the incentive to purchase now, despite the high gasoline prices that have battered sales of full-size pickups and SUVs.

Several GM pickup models also may be benefiting from the GM financing incentive, including the GMC Sierra 2500/3500 HD, the larger versions of GMC's light-duty pickups that typically are purchased for genuine commercial duty. These are vehicles that some individuals and small companies must purchase for business regardless of the economic climate, so some buyers may have decided to take advantage of the zero-percent purchase opportunity, which will yield savings to offset high fuel prices.

In fact, the list of top 10 GM gainers in consideration over the last week, according to the measure of considerations at Edmunds.com, is dominated by full-size SUVs and pickups :

GMC Yukon                       59%
Chevrolet Suburban             58%
Chevrolet Avalanche            47%
Cadillac DTS                      45%
GMC Canyon                     44%
GMC Sierra 2500/3500HD   44%
Chevrolet Silverado 1500     43%
GMC Sierra 1500               42%
Chevrolet HHR                   40%
Buick Lucerne/Lacrosse     39%

From a divisional standpoint, Pontiac has most improved its consideration during the 72-month financing event. The brand garnered 30 percent more unique visitors from June 22-29. Hummer, Cadillac and Buick all received double-digit increases in traffic: 15 percent, 14 percent and 11 percent, respectively.

Edmunds data experts are careful to point out that the incentive did not appear to significantly increase the overall consideration numbers for GM at the site, only the consideration for select models, such as those large gainers detailed above.

But the outsized and heavily promoted incentive program likely helped GM to mitigate the effects of what turned out to be one of the industry's worst single sales months in years. GM posted a comparatively bearable 8 percent sales decrease in June when measured against double-digit losses of 28 percent and 19 percent for Detroit rivals Chrysler LLC and Ford Motor Co., respectively, and a 12 percent plunge at Toyota Motor Corp.

GM is no stranger to the long-term financing incentive. It successfully leveraged the 6-year term/no-interest financing scheme in July 2006 and September 2004.

Jesse Toprak, executive director of industry analysis for Edmunds.com, the parent of AutoObserver, said of the incentive, "Automakers are trying to find ways to jump-start some of the lowest levels of new vehicle sales in several years. Zero-percent financing for six years promotions have been quite successful in the past -- especially when they were offered for a limited amount of time."

Although GM has said it will end the program after the July 4 holiday weekend, some are speculating the company may again extend the incentive, which it originally said would run only until the end of June.

Photos by GM

1. During GM zero-percent financing program, GMC's Yukon has seen the highest jump in measure of consideration at Edmunds.com.

2. Pickups and SUVs so far dominate list of vehicles seeing the greatest increase in consideration during GM's ongoing 72-month financing incentive.

Bill Visnic:  is an AutoObserver Senior Editor. Follow @AutoObserver on Twitter