DETROIT — General Motors confirmed Thursday that it will offer 7.9% financing on some of its cars and trucks, and Ford Motor quickly followed suit with the same incentives.
GM, the No. 1 auto maker and industry price leader, said it will offer the rates on 40% of its cars. Ford announced a few hours later that it, too, will offer 7.9% financing on 40% of its cars.
"Essentially, it is a competitive response to help us maintain our sales momentum," said John Seig, spokesman for No. 2 Ford.
GM sparked a cut-rate loan and rebate war during August and September, causing domestic auto sales to double overnight. The auto maker, however, lost market share during the pricing war with other domestic auto makers.
In an interview on Dec. 17, GM Chairman Roger B. Smith said that GM would be more careful about launching its next sales incentive campaign and that the company would even prefer that one of its competitors take the first step.
But GM spokesman Harold Jackson said competitive considerations prompted the biggest auto maker to move first.
GM has been losing market share to Ford and Chrysler Corp. for more than a year. Its dealers have a 110-day backlog of unsold cars, compared to the desired level of 60 days, said Arvid Jouppi, an auto industry analyst based in Detroit.
In the most recent sales reporting period, the first 10 days of December, GM reported a 10.2% decline in sales from the same period in 1984 while Ford sales were down 18.1% and Chrysler sales were off 11.4%. Chrysler, the No. 3 domestic auto maker, has no plans to replace its current incentive program, which features 8.6% financing and rebates of $500 to $1,000 on some cars, a spokesman said.
Both Ford and GM said the 7.9% rates would be offered on deliveries taken from existing inventories through Feb. 22.
GM said that among the cars covered by the 7.9% financing is the slow-selling Chevrolet Nova, built jointly in California by GM and Toyota Motor Corp. of Japan.
Other vehicles include some models of the Chevrolet Cavalier and Celebrity; the Pontiac Fiero, Sunbird, 6000, Grand Prix and Bonneville; the Oldsmobile Cutlass Ciera and Cutlass Supreme; the Buick Somerset, Skylark and Century, and the Cadillac DeVille.
Trucks in the program include the Chevrolet El Camino and GMC Caballero.
Ford models eligible for the low-interest financing include 1985 and 1986 Tempo and Topaz, 1985 and 1986 Thunderbird and Cougar models with 3.8-liter engines; 1985 Merkur XR4Ti; 1985 F-150 4X2 regular cab and supercab models, and 1985 and 1986 Ranger 4X2 regular cab and supercab models, except for the Ranger S model.