Mitsubishi Motors keeps 0% loans as rivals turn to rebates

June 10, 2002 Bloomberg News is reporting that Mitsubishi Motors Corp. plans to keep its U.S. strategy of letting customers drive off in new cars or trucks for no money down and no interest or payments for a year as rivals shift to more expensive rebates.

The Tokyo-based maker of the Lancer small car and Montero sport-utility began offering consumers the option to finance new cars and light trucks under the so-called 0-0-0 program in 1999. It helped increase sales while cutting incentive costs, said Pierre Gagnon, president and chief operating officer of Mitsubishi's U.S. sales unit.

"GM and Ford started their 0 percent campaigns last fall, but we've been doing this for three years," Gagnon said in an interview. "In the first quarter of 2002, our incentive spending was 25 percent less than last year, and in the last two years we've seen a steady decline in overall incentive costs."

Automakers, led by General Motors Corp. and Ford Motor Co., touted no-interest loans last year to reverse a slide in vehicle sales after the Sept. 11 attacks. In recent weeks, General Motors, Ford and replaced the programs with less costly cash-back offers as shoppers responded less to no-interest loans.

Mitsubishi's system helped cut incentive costs to about $1,400 per vehicle, less than an industry average of almost $2,500, said Art Spinella, president of CNW Marketing Research Inc., which tracks incentive spending by automakers.

Sales for Mitsubishi, the eighth-largest automaker in the U.S., this year through May rose 15 percent to 151,202, and Gagnon said the company is on pace to beat its goal of selling at least 350,000 vehicles in the largest market in 2002.