FI showroom red and grey logo
MenuMENU
SearchSEARCH

Automotive Rebate War Intensifies

by Staff
May 31, 2001
3 min to read


The great automotive rebate war just keeps getting bloodier, according to a May 31 story by Joe Miller and Susan Carney in The Detroit News.


With car and light truck sales expected to be down once again in May, Detroit's automakers are desperately enticing buyers with lucrative -- and for the manufacturers, expensive -- incentives.

Ad Loading...


Whether it's no-interest financing on Lincolns and Buicks, $300 worth of free gas for buyers of Chrysler or Dodge minivans, $1,500 cash-back offers on once hot-selling sport-utility vehicles and full-size pickup trucks, or getting out of a GM lease early with no penalties, competition of the fierce, take-no-prisoners variety is the name of the game.


Average incentives are $2,698 at Ford; $2,814 at DaimlerChrysler; and $2,741 at GMwith an industry-wide average of $2,619 (Source: CNW Marketing/Research, Bandon, Ore.)


General Motors Corp., starting Friday, will offer select customers the opportunity to get out of their current lease early and with no mileage or other penalties, as long as they buy another new GM vehicle.


Even loyal Mercedes-Benz customers can get $1,400 toward the purchase of a new Mercedes E-class luxury sedan.


The proliferation of rebates is making it a buyer's market. With new-vehicle incentives averaging $2,619 per vehicle in the second half of May, up 38 percent from a year ago, according to CNW Marketing/Research Inc., the price tag for automakers could be as much as $3.9 billion in incentives in May alone.

Ad Loading...


With so much money being thrown at them, some shoppers are driving hard bargains and playing dealers off on one another.


Still, even with attractive rebates and lease deals, analysts expect industry sales to dip again in May, with Detroit's Big 3 -- GM, Ford and DaimlerChrysler AG's Chrysler Group -- taking the biggest hits. They also expect the huge price tag of the expensive rebates to cut further into the three Detroit automakers' already shaky profits for 2001.


The rebate battle also is upsetting some dealers, who say the short-term deals are not only eroding the brand equity of some vehicles but driving a wedge between themselves and customers.


Last year, Chrysler, hoping to save money and betting that the industry would follow its lead, pulled out of the rebate war. But the automaker quickly jumped back into the fray when it began losing ground to the competition. Since then, no automaker has been willing to be the first to cut incentives again.


As a result, fewer customers are loyal to a single vehicle brand. Consumers are basically waiting for the next incentives, according to industry analysts.

Ad Loading...


May sales, which will be announced Friday, could prompt even bigger rebates, according to auto industry analysts. May sales for GM, Ford and Chrysler are expected to fall well short of last year's record pace. Analysts also expect the three automakers to continue to lose ground to Japanese, Korean and European brands.


Merrill Lynch & Co. is forecasting a 5 percent sales decrease for GM in May, 10 percent for Ford and 10 to 12 percent for Chrysler. Merrill Lynch expects the combined sales of other automakers to rise 4 percent. Credit Suisse First Boston has GM down 6 to 8 percent and both Ford and Chrysler down 7 to 9 percent.


For a list of current cash rebates and reduced-rate financing plans for new vehicles, visit http://detnews.com/autos/deals.html.


Topics:F&I

More F&I

Man holding magnifying glass over sales volume paper.
F&IMay 29, 2026

Why Your F&I PVR Is Misleading You

Here’s a handy checklist of the numbers to track in 2026 instead.

Read More →
Photo of woman typing on a laptop as she sits on a couch
F&Iby Hannah MitchellMay 29, 2026

Auto Consumer Anxiety Presents Opportunity

A survey of U.S. drivers found the majority are concerned about finances and the economy, but those fears make many ready to buy vehicle-protection products.

Read More →
Dustin Gingerich standing on stage giving a presentation
F&Iby Lauren LawrenceMay 28, 2026

Humble and Hungry: 12 Rules for an F&I Life

Dustin Gingerich, with a decade in the F&I business under his belt, shares his thoughts on leadership, building trust with customers, and the importance of learning and innovation.

Read More →
Ad Loading...
Photo of businessman's hands resting on files on a desk
F&Iby John TabarMay 27, 2026

Focus on the Opening

F&I managers must learn as much as possible about their customers, starting before they walk into their offices. The bulk of today’s consumers expect that, and good results will follow.

Read More →
Photo of a three-seat vehicle back seat
F&Iby Hannah MitchellMay 22, 2026

F&I Reaches for the Sky

The increasingly important profit center continued making gains in the first quarter, according to StoneEagle data, ancillary products proving more popular as consumers hold onto their buys longer.

Read More →
Cover image for a BOK Financial report titled “Timing the market: How avoiding volatility entirely can hurt long-term reinsurance program performance.” The image shows several road construction barricades with flashing amber warning lights lined up in a nighttime work zone. Beneath the image, red text explains that avoiding volatility can mean falling behind inflation and missing market rebounds that drive long-term surplus growth. The BOK Financial logo appears at the bottom right.
SponsoredMay 8, 2026

Timing the Market Can Hurt Long-Term Program Performance

For dealer-owned reinsurance entities, avoiding volatility entirely can mean falling behind inflation and missing market rebounds that drive long term surplus growth. Missing just a handful of strong market days can materially impact cumulative returns—an important reminder for long horizon trust and investment strategies.

Read More →
Ad Loading...
Ryan Ruff, The 90/10 Rule, Automotive Training Academy, Sales Series
F&IMay 6, 2026

The 90/10 Rule

In this video, Ryan Ruff explains the rule that elite sales professionals use to turn ordinary conversations into unforgettable customer experiences.

Read More →
Photo of essential oil diffuser on desk next to laptop
F&IMay 4, 2026

Your Office Is Talking

What’s the atmosphere saying about you to your customers? You can make minor adjustments and additions that transform your space into one that creates trust with the people on the other side of the desk.

Read More →
"Effective training ensures the customer’s needs remain at the heart of everything we do. When that is the focus, both sales and profits naturally improve." by Rick McCormick with F&I and Showroom logo and picture of Rick McCormick
F&IMay 1, 2026

F&I Training Fundamentals

How can auto dealerships help F&I managers fulfill their vital role in the most effective ways? Industry expert Rick McCormick shares his insights on the best ways to train these professionals and help them maintain good habits.

Read More →
Ad Loading...
Photo of car tire and the tread mark it left in snow
F&Iby Hannah MitchellApril 29, 2026

Not Just Any Tire Will Do

More consumers and businesses are opting for all-season options for various reasons as safety, sustainability and convenience push practical change.

Read More →