Financing Deals Drive Cars
Aggressive manufacturer-sponsored rebates and low-interest finance rates that are currently spurring strong auto sales are the most effective tool in influencing new-vehicle buyers, according to the J.D. Power and Associates 2002 Escaped Shopper and Owner Loyalty Study. Among new-vehicle buyers who rejected at least one other model and who obtained zero-percent financing, nearly one-half rejected another model because it failed to offer sufficiently low rates.
"The study shows that shoppers weigh the incentives of one model over another," said Chris Denove, partner at J.D. Power and Associates. "When zero-percent financing first hit the scene, it drew people into the market who otherwise would have delayed their purchase. But now that the newness of it has worn off, we're seeing that 2.9 percent interest rates will do just as good of a job in convincing someone to buy one model over another that doesn't offer a similarly low rate."
Price continues to be the primary reason consumers decide not to purchase a model they originally consider. The study finds that when someone considers two or more cars, they usually end up buying the less expensive model.
Competitive price advantages help explain why Hyundai, Kia and Suzuki have the highest closing ratios among non-luxury nameplates, and Acura and Infiniti have the highest closing ratios among the luxury brands. Some high-end brands such as Cadillac, Lincoln and Porsche are frequently purchased by people who are committed to buying that specific make, and therefore rarely go out to look at any other makes. These brands, however, have relatively low closing ratios among people who also look at alternative models that are lower priced.