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DETROIT -- General Motors Corp. (GM) is for the first time offering discounted financing on its Hummer H2, the icon of the market for supersize sport-utility vehicles, amid slumping demand for large SUVs and rising gasoline prices, according to Friday's Wall Street Journal.
After a 21% sales decline in April, GM now will offer qualified Hummer customers 2.9% rates on five-year loans. GM's move comes amid a flurry of similar actions by Detroit rivals Ford Motor Co. and DaimlerChrysler AG's Chrysler unit to ratchet up discounts on SUVs in the wake of sluggish April sales. With unleaded-gasoline prices at a national average of $1.84 a gallon, and more than $2 a gallon on the West Coast and in some other places, the actions are a sign that auto makers are determined to sustain demand for big, gas-guzzling SUVs.
"We are expecting larger incentives from manufacturers to compete against the rising cost of fuel," said Allen Levenson, vice president of sales and marketing at Asbury Automotive Group, a retail chain of 100 dealerships. "If the fuel prices continue to rise, this will definitely affect the larger SUV market, and people will go to the smaller vehicles."
To move out bloated inventories of its Chevrolet Suburban and Cadillac Escalade big SUVs, GM is offering dealers $500 to $1,000 bonuses for hitting company-issued sales targets. Cadillac dealers have a bulging 125 days' stock of unsold Escalades, roughly twice the level that car makers consider ideal.
Whether the latest big SUV slump will be a lasting trend isn't clear. Big SUVs have suffered sales dips before, only to bounce back. Despite criticism of the category from environmentalists and others concerned about the U.S. dependence on foreign oil, consumers have embraced big SUVs for their comfort and carrying capacity.
After a 21% sales decline in April, GM now will offer qualified Hummer customers 2.9% rates on five-year loans. GM's move comes amid a flurry of similar actions by Detroit rivals Ford Motor Co. and DaimlerChrysler AG's Chrysler unit to ratchet up discounts on SUVs in the wake of sluggish April sales. With unleaded-gasoline prices at a national average of $1.84 a gallon, and more than $2 a gallon on the West Coast and in some other places, the actions are a sign that auto makers are determined to sustain demand for big, gas-guzzling SUVs.
"We are expecting larger incentives from manufacturers to compete against the rising cost of fuel," said Allen Levenson, vice president of sales and marketing at Asbury Automotive Group, a retail chain of 100 dealerships. "If the fuel prices continue to rise, this will definitely affect the larger SUV market, and people will go to the smaller vehicles."
To move out bloated inventories of its Chevrolet Suburban and Cadillac Escalade big SUVs, GM is offering dealers $500 to $1,000 bonuses for hitting company-issued sales targets. Cadillac dealers have a bulging 125 days' stock of unsold Escalades, roughly twice the level that car makers consider ideal.
Whether the latest big SUV slump will be a lasting trend isn't clear. Big SUVs have suffered sales dips before, only to bounce back. Despite criticism of the category from environmentalists and others concerned about the U.S. dependence on foreign oil, consumers have embraced big SUVs for their comfort and carrying capacity.