U.S. automakers extend discount wars through March

Thu Feb 27, 2014 5:08pm EST
 
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By Paul Lienert

DETROIT (Reuters) - General Motors Co GM.N and Ford Motor Co (F.N: Quote) this week ramped up deep discounts on many of their U.S. models, extending those offers through March in an effort to lure customers back into winter-ravaged showrooms.

Some of the heaviest discounts are being offered by Ford and Chevrolet dealers on full-size pickups - $8,000 and more on the 2014 Ford F-150 and $9,000 and more on the 2014 Chevrolet Silverado, according to Internet listings posted Thursday.

But U.S. dealers also are sweetening deals on a wider range of vehicles, from low-priced economy cars such as the Chevrolet Sonic to popular crossovers such as the Ford Escape, fueling fears of an escalating "discount war" among the bigger manufacturers.

The latest offers come as the Detroit automakers and a number of their competitors appear to have been slammed by a third straight month of extreme weather in many parts of the United States, causing inventories of unsold vehicles to remain at unseasonably high levels.

"We believe short-term pent-up demand is building, but it's difficult to know when it will be released," said analyst Joseph Spak of RBC Capital Markets. "It could be March or spread out over a few months (and) is also likely dependent on the weather."

Analysts polled by Reuters estimated U.S. vehicle sales in February will be relatively flat from a year ago, at around 1,196,000, representing an annualized rate of 15.4 million. After dismal sales in January, analysts had predicted an uptick in February.

BALANCING ACT

The challenge for GM and Ford has been to maintain a delicate balance between pricing and discounts, one of the key incentives offered by the industry. This task is made a bit easier with big pickups, high-margin vehicles that traditionally provide the lion's share of pretax profit in Detroit.   Continued...

 
2014 Chevrolet Silverado pick up trucks are pictured in Thurmont, Maryland February 6, 2014. REUTERS/Gary Cameron