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Ford Solicits Scarce Buyers with Advantage Plan

Payments are covered for 12 months if purchaser loses job.

by on Mar.31, 2009

Ford marketing flatters Hyundai by emulating incentives.

Ford marketing copies Hyundai incentives.

If imitation is the sincerest form of flattery, then Hyundai Motor America marketing executives should be blushing bright red as General Motors Corporation and Ford Motor Company followed it today with buyer payment protection plans that emulate its breakthrough Hyundai Assurance Program that has boosted sales by at least 10% in Hyundai’s estimation.

In the face of frightening U.S. sales declines in February that made it the lowest February sales on record going back to 1967, automakers are desperately trying to reassure customers that now is the time to buy with a variety of incentive packages. (February year-over-year comparisons ranged from -53% at GM, -48% Ford, -44% Chrysler, and -35 to -37% at Toyota, Honda and Nissan.)  Auto sales in the first two weeks of March were down 40% compared to a year ago, and running at a dismal annual rate of  9.2 million units, according to J. D. Power and Associates.

Automakers are increasingly using as an inducement guaranteed-payment of car loans, if the buyer loses his or her job — certainly a very real threat at domestic car companies, if not for workers in the slumping economy as a whole. 

controversial bill has also been introduced in the U.S. House of representatives (H.R. 1550, or the CARS Act) could help kick-start the American automotive market by providing cash incentives of up to $5,000 for those who trade in a vehicle at least eight years old for a limited selection of  fuel-efficient products produced in North America.  The legislation, as initially proposed, would offer the biggest tax credits for U.S.-made vehicles, though products made in the NAFTA countries, Canada and Mexico, would also qualify. 

Ford will cover payments of up to $700 a month for up to 12 months on any new Ford, Lincoln or Mercury vehicle, if buyers lose their jobs. At the same time 0% financing is also being offered through Ford Motor Credit on select vehicles. Ford is calling its plan “the most comprehensive program available to boost consumers’ buying confidence,” an assertion that is dubious, but expected in the world of marketing hype. The GM plan doles out about equivalent amounts of cash, only in different ways. 

“Consumers remain anxious about the economy and their own outlook for the future. We at Ford want to do our part to rebuild faith in the marketplace by offering payment protection on every new Ford, Lincoln or Mercury vehicle for up to a year if our customers lose their jobs,” said Ken Czubay, vice president of Sales and Marketing.

GM will cover up to nine car payments, each for up to $500, if a buyer loses their job during the first 24 months of ownership. The buyer must have made at least three payments already, and must then be eligible for state unemployment coverage. Also part of the program, GM will cover up to $5,000 in losses should a buyer be upside-down, owing up to that amount more, for the loan on a trade-in. 

Hyundai’s Assurance Plus plan provides protection from job loss by allowing purchasers to return their vehicles in the first 15 months of ownership without impacting their credit histories, while covering vehicle depreciation (negative equity) up to $7,500. It runs until April 30, 2009. A 12-month version, Assurance, is currently in plaace until the end of the year.  A Hyundai spokesperson said the company is studying the latest announcements to see if any further action is required.

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