AppId is over the quota
AppId is over the quota
By Jeremy Anwyl September 15, 2011
Next week is the 10th anniversary of the launch of GM's Keep America Rolling/0% financing campaign. This campaign was quickly emulated by other manufacturers and is widely credited with averting a recession that threatened after the attacks on 9/11/01. From a retail sales perspective, the campaigns were a huge success. Deliveries shot up from a Seasonally Adjusted Annual Rate (SAAR) of around 16 million to a record breaking pace of over 21 million. GM was the biggest gainer, with their highest sales month in recent history. Ford wasn’t far behind. Every manufacturer saw sales increases.
I have run across a few recent stories that made the point that it was 0% -- and its success -- that lead to an unhealthy reliance by GM on large incentive programs to maintain sales volumes, eventually culminating in bankruptcy. These claims struck me as very simplistic. GM’s past difficulties were rooted in events and decisions made back in the Seventies and Eighties -- decisions with long cycle times. An excessive reliance on incentives is a symptom of a deeper problem (usually uncompetitive product) not the root cause. In fact, incentives are not always bad.
Look at the situation we are in today. Like post 9/11, the country is facing uncertainty about the future. Uncertainty that threatens to tip the economy into recession. We saw with Keep America Rolling that, given a reason to buy, consumers will put uncertainty aside. Arguably, in the aftermath of 9/11, the way forward was even more obscured than today. A few of the executives I have met with recently are fearful of a price war erupting late this year as the Japanese, with supplies rebounding, try to regain share and the domestics fight to keep recent share increases. My sense is this might not be such a bad thing. In fact, it doesn’t even have to be much of a war. Even a skirmish might do it.
Many consumers have delayed purchase, first because of recession, and more recently because of poor selection and concerns about pricing. I am guessing that a fair number of these potential buyers are waiting for a signal that it is a good time to buy. Getting that signal out into the marketplace could be just the thing to jumpstart sales. And that could, once again, be just what the economy needs.
Jeremy Anwyl: Chief Executive Officer of Edmunds.com. Follow @JeremyAnwyl on Twitter.
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