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Ford, GM Escalate Price War With Latest Rebates for SUVs

Wall Street Journal
U.S> Business News
Sholnn Freeman
January 31, 2003
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General Motors Corp. and Ford Motor Co. slapped larger incentives on popular sport-utility vehicles, escalating a discounting war in the light-truck category

In the move, Ford added a $500 direct-to-consumer rebate on SUVs, boosting cash discounts to $2,500 on the Explorer and to $2,000 on the Expedition. The Dearborn, Mich., auto maker followed GM, which earlier in the week began offering $2,500 rebates on many of its SUVs, including the Chevrolet Trailblazer, Suburban, Tahoe and GMC Yukon and Yukon XL models.

GM had ignited the industry price war last week by boosting incentives on full-size pickup trucks. Jim Cain, a Ford spokesman, criticized GM's actions, labeling GM's strategy "yo-yo" marketing.

But GM, after years of losing ground to rivals, is proving its strategy of aggressive discounting can deliver higher market share and bigger profits. "We're running the business how we need to run it," GM spokesman Jeff Roegner said.

To spur sales of Explorers and Expeditions, dealers say Ford has started to offer loans with longer-than-usual 72-month terms. Consumer advocates dislike the loans because buyers tend to pay thousands more in interest costs.

Despite the aggressive discounting, dealers around the country report weak January results, although the new deals have helped sales in past week.

German car maker DaimlerChrysler AG said it is considering its response. Daimler in the past has matched Ford and GM on truck incentives.

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