Reuters:
SOFT UNITED States vehicle sales in May, declining consumer confidence in the face of rising gasolene prices, and a weak sales forecast for the summer may spark a new rebate war among U.S. automakers, according to analysts.
With the companies gearing up to launch vehicles for the 2007 model year, most of them need to clear space on dealer lots that are now filled with 2006 models.
Mike Jackson, chief executive of dealership group AutoNation Inc., expects a form of clearance sale this summer.
"It is the end of the model year," said Jackson, who runs the largest public U.S. dealership group. "I think it is entirely appropriate."
Ford Motor Co., whose U.S. sales fell six per cent in May, upped the ante last week by offering interest-free loans on most of its vehicles and an extra $1,000 in cash for gas. This is in addition to rebates of up to $4,000 on certain models.
"For the last several months, spending strategies among the Big Three diverged, with GM pulling back while Ford and Chrysler pushed on," Merrill Lynch analyst John Murphy said in a recent note to clients. "We think the distinction may become more blurred this summer with the return to big incentives at all three companies."
