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Incentives Erode Consumer Loyalty Among Car Buyers

June 10, 2003

As Ford Motor Co. celebrates its 100 years in business next week, the world's second largest car company, along with the other Detroit auto

giants, is facing a tough future. American consumers have become addicted to incentives and heavy discounting, leading to an out-of-control price war that analysts say is causing a brand breakdown in Motown, according to MSNBC.

Rebate programs may be propping up sales for the Detroit car industry, but incentive madness is undermining long-term brand image and consumer loyalty for the "Big 3" car companies, industry analysts say.

Heavy discounts may get people who are in the market for a new car onto the lot, but they erode consumer loyalty as well as eat away at profits, MSNBC said.

David Cole, director of the Center for Automotive Research, says that car buyers today are "notoriously disloyal. They have no problem leaving for someone else's brand," said Cole. "What is critical for any manufacturer is to be the low-cost guy."

Caught in a "period of the survival of the fittest," as Cole describes it, the Detroit automakers are responding with new corporate image campaigns they hope will get them through one of the toughest times in their history, MSNBC reported.

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