DETROIT – General Motors Corp and Ford Motor Co announced a new series of incentives covering payments if customers lose their jobs, joining rivals in offering heavy discounts to attract consumers sidelined by the recession.
GM, which has relied on $13.4 billion of government loans to survive since the start of the year, said on Tuesday it would cover nine payments, up to $500 per month, if GM auto buyers lost their income. The offer is effective Wednesday and will last through April 30.
For its part, Ford, which has not sought government funding, said it would cover payments for up to a year if customers lose their jobs, under a program that runs through June 1.
Both programs, being offered in addition to zero-percent financing, come at a time when U.S. auto sales are at their lowest levels in nearly three decades under the pressure of tight credit and weak consumer confidence.
U.S. auto sales likely fell 40 percent in March from a year earlier to the lowest level in more than 27 years, adding pressure to the cash-strapped auto industry, according to a Reuters poll of 31 economists.
South Korea's Hyundai Motor Co has outperformed almost all major automakers in the U.S. market so far this year, helped by a program launched in January that allows customers to return vehicles if they lose their jobs within the first year of the purchase.
GM's U.S. sales tumbled 51 percent and Ford's U.S. sales were down 44 percent in the first two months of 2009, compared to a market that declined 39 percent overall.
Hyundai's sales rose 5 percent over the period.
GM and Chrysler LLC, pushed to the brink of bankruptcy by the steep downturn in sales, are operating on $17.4 billion of government loans and have requested for nearly $22 billion more.
But President Barack Obama on Monday ordered GM and Chrysler to accelerate their survival efforts to access more funding and warned the alternative could be bankruptcy.
Ford is the only U.S. automaker that has not sought government funding to survive.
(Editing by Patrick Fitzgibbons and Dave Zimmerman)