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Top automakers prepare for price war this summer

The Big Three automakers are gearing up for a summer price war as they try to jump-start sales in the face of fierce competition from Asian automakers.

General Motors said on Tuesday it would extend its wildly popular "employee discount" program for another month after it helped boost sales a whopping 41 percent in June.

Ford Motor Co followed suit hours later by announcing its own discount program and DaimlerChrysler -- which began to offer the incentive at some dealerships over the weekend -- has said it will announce the details of its program by yesterday for its domestic Chrysler unit.

GM's catch-phrase "you pay what we pay" discount enticed more than 550,000 people to sign on the dotted line in June by offering a potential savings of up to US$10,000 per vehicle.

The program brought the world's largest automaker 150,000 new customers and made June the company's best sales month since September 1986.

It also didn't end up costing the company much more money than previous promotions as GM's incentive cost per vehicle rose just US$136 to US$3,865 last month, research firm Edmunds.com said.

"The company had an outstanding sales month while only marginally increasing its incentives spending, having lowered cash rebates and special financing programs in order to subsidize the promotion," said Jane Liu, vice president of data analysis for Edmunds.com.

"Customers like the one-price, no-haggle aspect of the program," Liu said.

Ford, meanwhile, refrained from offering customers the same prices it offers employees in June, but still saw incentive costs rise US$249 to US$3,188 per vehicle sold even as its market share fell, Liu said.

Ford's market share fell to about 17.0 percent last month, compared with 19.5 percent in June last year.

Chrysler's share declined to 14.2 percent from 15.7 percent, according to Ward's Automotive Reports.

Despite a variety of incentives from Detroit automakers, Asian manufacturers have grabbed 35.7 percent of the US market in the first six months of the year, on a pace that would eclipse their record 34.6 percent last year, according to research firm Autodata Corp.
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