General Motors Corp. announced yesterday that it will extend its business-stimulating zero-percent financing plan by another 18 days.
GM's "Keep America Rolling" program was scheduled to end Oct. 31, but will run until Nov. 18.
"This highly successful marketing program is clearly achieving its objectives to stimulate vehicle sales and to help stimulate economic activity during this critical time," William J. Lovejoy, GM group vice president for vehicle sales, service and marketing, said in a statement.
GM initiated the program Sept. 20 to revive sales nearly halted after the Sept. 11 terrorist attacks.
Ford Motor Co. and DaimlerChrysler AG quickly followed with their own interest-free financing.
Toyota Motor Corp., Honda Motor Co., Nissan Motor Co., Suzuki Motor Corp. and Mitsubishi Motors Corp. later offered improved financing and incentive plans.
Ford and DaimlerChrysler have yet to decide if they'll extend their zero-percent financing promotions, which are set to expire Oct. 31, spokesmen for the automakers said.
"GM's program has been a great stimulus on sales," said Peter Kitzmiller, president of the Maryland New Car and Trucks Dealers Association, a trade group that represents about 320 of the state's 350 new-car dealers.
Kitzmiller said dealers told him recently that sales have been very strong in October.
He credited zero-percent financing with clearing out just about all of the 2001 model cars still on new-car lots in the state.
The National Automobile Dealers Association reported yesterday that U.S. new-car sales were 14 percent higher in the first two weeks of October when compared with sales in the corresponding period last year.
GM's decision to extend its zero-percent interest program comes two days after Standard & Poor's reduced the company's long-term corporate credit rating from A to BBB plus.
S&P; also cut Ford's rating by the same amount.
The move by the credit rating agency is likely to make it more expensive for the automakers to borrow money, a blow to their giant finance units, which rely heavily on commercial paper to finance loans to car buyers.
S&P; was concerned about the automakers' marginally profitable operations at a time when the industry appears headed toward its third-best-selling year in history.
George E. Hoffer, a professor of automotive economics at Virginia Commonwealth University and a consultant to the auto industry, said the zero-percent plan is probably the best financing deal for car buyers in the 30 years. He said it was not that costly because of the decline in interest rates.
Hoffer said that while GM, Ford and Chrysler might be losing money on their financing, they would lose a lot more if they were forced to close vehicle assembly plants and lay off workers.
Under terms of the United Auto Workers contract, the automakers would have to pay laid-off workers most of their salaries.
The Associated Press contributed to this article.