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Auto Rebates, Cheap Loans Coming Faster

October 21, 2003

Automakers are offering cash rebates and cheap loans on new model-year cars much more quickly than they have in the past, according to USA Today.

The national newspaper said that it's a sign that incentives are no longer being used just to reduce bloated inventory or clear out last year's models. Instead, the deals have become an

important tool as automakers adjust prices throughout the year to meet swings in demand, both nationally and regionally, USA Today reported.

For automakers, being more aggressive with incentives is a bid to hold market share and keep plants running during slow selling periods, the national newspaper reported. For consumers, it means great deals on new cars but likely reduced value at trade-in, according to USA Today.

"The U.S. auto industry has become an everyday-low-price business," said Wall Street analyst John Casesa of Merrill Lynch. Casesa said the incentive war won't slow down "until income and employment growth accelerate meaningfully." He warns that "the price war remains a cloud overhanging" the value of automakers' stock, according to USA Today.

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