The Motley Fool:
What will those wily car-sellers come up with next? They’ve offered 0% financing, big rebates, guaranteed hefty trade-in values, and even free gas. (My parents were offered free car washes by a Honda dealer.) Well, here’s a sales strategy that’s new to me - free car insurance.
At an Australian auto news site, I read that down under, DaimlerChrysler is dangling two years’ free car insurance to prospective buyers of its new Dodge Nitro SUV. The value of that carrot was calculated to be up to roughly 10% of the value of the vehicle - no small matter.
When I read this, I imagined that we’d soon see this kind of promotion being offered here in America. But then I learned that Volkswagen has already offered it here in some markets, to try and light a fire under slowing sales. So perhaps a U.S.-based flurry of free insurance offers is about to erupt.
Indeed, the American auto industry is ailing, so there’s every reason to look to new kinds of incentive to try to build sales. General Motors recently reported a 24% fall in June sales, while Ford sales dropped 11% and Chrysler fell 5%. Meanwhile, Japanese automakers Nissan, Toyota, and Honda all reported rising sales. Lest you think that incentives are only for those desperate for sales, Toyota offered 0% financing and cash rebates on its new Tundra pickups, leading to Tundra sales more than doubling. General Motors, with the worst showing, had actually cut back on its incentives.
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