An Incentive For Carmakers To Halt Incentives

They're sabotaging profits as they grab for market share

After years of steadily losing ground to competitors, General Motors Corp. made a dramatic turnaround in October, adding two points of market share, pushing it from 28% to 30%. But that's no reason for rejoicing at GM headquarters. The sales surge, fueled by generous offers like five years of interest-free financing--worth about $3,000 per vehicle--will take a bite out of fourth-quarter profits. And GM isn't alone. DaimlerChrysler blames the cost of incentives for Chrysler Group's $534 million third-quarter loss. Says Ronald L. Zarrella, GM North America's president: "It's great for consumers, but it's forcing thinner margins on everybody."

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