Toyota, Mitsubishi Extend Zero Percent Interest
Japanese auto manufacturers Toyota Motor Corp. and Mitsubishi Motors Corp. announced on Nov. 5 they would extend their current zero-interest financing deals in the United States until the end of November.
Zero percent and low interest loans have helped spark an an industry price war as automakers try to win back consumer confidence in the wake of the Sept. 11 terrorist attacks.
General Motors Corp. started the battle in September with others in the U.S. market soon joining the melee.
The financing deals have had the intended revitalizing effect on car sales, with October industry-wide sales hitting record numbers. October sales, at 1.72 million units, rose 24 percent to a seasonally adjusted annual rate of 21.3 million vehicles.
GM, Ford Motor Co and the Chrysler division of DaimlerChrysler AG have said they would offer their loan deals through mid-November. GM's deals currently run through Nov. 18, Chrysler's through Nov. 19, and Ford's through Nov. 20.
Analysts and car industry executives have warned that the zero percent loans, which are very costly for the car makers, are eroding profitability and eating into future sales.
Mitsubishi is offering zero interest financing on six models it sells in the United States, including its Montero Sport and Montero Limited SUVs.
Toyota offers the deals on three older vehicles: its Tundra pickup truck, Corolla sedan and the Fourunner sports utility vehicle.
Toyota's US sales skyrocketed 28 percent in October, while Mitsubishi's sales rose 13 percent.
Other Japanese auto manufacturers have been slower to jump on the bandwagon. Honda Motor Co. Ltd. and Mazda Motor Co. Ltd. have not offered bargain basement financing in the United States.
Honda's U.S. sales rose 19 percent, due largely to strong brand loyalty and a spillover effect from the prevalence of cheap financing, which apparently has inspired more people to visit car showrooms in general.
Mazda's U.S. sales rose six percent.
Nissan, after offering zero interest loans on two older models in October, has mostly discontinued the deals. Its U.S. sales rose eight percent in October.
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