Manufacturers in the US extending 24 Hour Test Drive Offers
These days cars have so many complex features that you can only really appreciate the whole experience in a longer test period:
24-Hour Test Drives Seem to Pass Carmakers' Test as a Sales Tool
By FARA WARNER
Published: April 10, 2004
ETROIT, April 9 - With big cash incentives appearing to lose some of their power to attract buyers, General Motors and several other automakers are extending 24-hour test drives and other hands-on marketing programs, particularly for featured new models that they would rather not sell at a steep discount.
On April 1, for example, G.M. started the fourth round of its 24-hour test drives, which let potential customers take a car home overnight so they can better see how much cargo it carries, how their children fit in the back seat, or how the neighbors react. In the year since the program began, about 650,000 people have taken part, and roughly one-third bought the cars they tested.
Following G.M.'s lead, Volkswagen and Ford Motor are offering their own versions of the 24-hour test drive, at least for their luxury makes. Audi, a unit of Volkswagen, is running a program aimed at winning converts before it introduces several new cars later this year. Jaguar, owned by Ford, will offer overnight drives of its XJ sedan to owners of other luxury cars.
DaimlerChrysler is thinking bigger, inviting four million people to a "premiere night" on April 22 to show off many of its new vehicles. Dodge and Jeep will have their own premiere nights later in the year. This summer, Mercedes-Benz will invite a million people to events in 12 cities.
"The incentive war is being replaced by a product war," said Gary Dilts, senior vice president for sales at the Chrysler Group, which oversees Chrysler, Dodge and Jeep.
Car executives are trying to draw attention to their cars, hoping to shift buyers from thinking so much about incentives. Still, cash rebates, low-interest loans and other financial incentives are not likely to go away soon, executives and analysts say. "Everybody still wants the deal," said Bill Mistele Jr., general director of retail strategy at G.M.'s dealer network.
But Mr. Dilts said: "The discount game isn't working for anybody. We have to fight the trend of ridiculously high incentives. It's just repricing on the fly."
Chrysler, which is notable for having some of the industry's most aggressive incentives, in the first two months of 2004 offered both no-interest loans and $2,000 cash back. Edmunds.com, an online research company, estimates that Chrysler's incentives now average $3,857 a vehicle, more than 50 percent above the industry average of $2,459 for February. G.M. has also been a big player in the incentives battle ever since it began its "Keep America Rolling" campaign after the terrorist attacks of Sept. 11, 2001.
Last week, G.M. rolled out another batch of incentives including a no-interest financing program coupled with a $1,000 cash-back offer. But recent data from Edmunds.com shows that incentives have failed to help any manufacturer gain market share, particularly not G.M. and Chrysler. In January, for example, Chrysler's incentives jumped 5 percent, but its market share remained unchanged. G.M. cut its incentives a little, but its market share slid a lot.
"Incentives are being taken for granted," said Jesse Toprak, director of pricing and marketing analysis at Edmunds.com. "It's no big deal anymore to see $3,000 or $4,000 cash rebates."
By contrast, niche marketing programs like 24-hour test drives appear to be changing people's impressions, particularly of brands like Cadillac and Chevrolet that have slid off many consumers' car shopping lists.
Sam Offen, 82, a furrier from Birmingham, Mich., took out a Cadillac CTS a year ago and ended up buying a similar model. "It was so new to me to be able to take the car home," said Mr. Offen, who had been driving an Oldsmobile Aurora. "It was that level of trust, plus the fact that I liked the way the car drove, that made me decide to buy the car."
Mr. Mistele, the G.M. executive, said the 24-hour test drives had a 34 percent closing rate, compared with the 20 to 25 percent average for consumers who only visit the showroom or take a traditional test drive.
The extended test drives also give G.M. an opportunity to show off technology that many customers might not know comes on its products, like the OnStar navigation and information system, or XM satellite radio.
One benefit of offering OnStar on the vehicles is that G.M. can keep track of them when they are away for 24 hours. Mr. Mistele said G.M. had not had any problem with people returning the vehicles. The program requires test drivers to leave their own cars at the dealership and have a valid driver's license and proof of insurance.
Chrysler is hoping to achieve the same kind of results with its "Premiere Night" promotions. It said it expected at least 150,000 people to attend the first one, on April 22, at nearly 2,100 Chrysler dealerships, when it will show off the Chrysler 300 series sedan, the PT Cruiser Convertible and an updated Town & Country minivan.
Still, a financial deal is almost always needed to get people to buy a car even after they fall in love with it, dealers say.
"Incentives are always going to be with us even though zero-percent interest doesn't jam a showroom like it used to," said Jerry Seiner, president of the Jerry Seiner Dealerships in Salt Lake City, which carry every G.M. brand. Mr. Seiner has had customers who traded in a Porsche Cayenne for a Cadillac SRX, but he said they still they wanted to take advantage of special lease and payment options.
Audi learned that lesson when it introduced its 24-hour test drive in late January. The number of people willing to take the test drive was relatively modest until Audi began offering a competitive lease in early March.
"We found you can't do one without the other," said Russ Hill, Audi's United States sales director. "You've always got to marry the drive with a value proposition."
Despite that, Mr. Hill said the program's real intent was to get people to think about Audi's cars, not just the deals, over the next few months. "In nine months, we have a slew of new products coming," he said. "We want to sell those cars, not just compete on the monthly payments."
