(Updates throughout with new GM, Ford incentives)
By Michael Ellis
DETROIT, Jan 23 (Reuters) - General Motors Corp. said on Thursday it was cutting production at two plants due to flagging demand amid a slow U.S. economic recovery, as it offered new incentives on other vehicles to boost sales.
GM, the world's largest automaker, said it will offer to waive lease payments for customers of most of its brands if they buy or lease a new model.
For customers whose lease on their current Chevrolet, Cadillac, Pontiac, Oldsmobile, Buick, GMC or Saturn vehicle expires between April 1 and Aug. 31, GM will waive all remaining payments if they lease a new vehicle, GM said.
The new incentive program, which runs through March 31, comes a week after Ford said it would waive up to eight months of current lease payments on four of its top-selling Ford brand vehicles, providing those current customers lease or buy a new Ford car or truck.
GM also raised cash rebates on its Chevrolet Silverado, GMC Sierra and Chevrolet Avalanche full-size pickups to $2,500, an increase of $500, GM spokesman Jeff Roegner said. Ford said it will match the GM offer on most of its F-Series full-size pickup trucks.
GM is also offering dealers up to $1,000 on every car or truck that has gone unsold for more than 120 days, Roegner said. That offer covers a small number of vehicles, and they must be sold by the end of the month, he said.
Ford's head of revenue management said in an interview with Reuters U.S. incentives are so high that any further increases would hurt profits more than boost sales. He added that Ford would not surrender market share to aggressive GM.
However, GM, which has led Detroit's price war, last week reported stronger earnings and profit margins for the fourth quarter, as high incentive costs were offset by stronger sales and cost-cutting.
Beginning next week, GM's Flint, Michigan, commercial truck chassis plant will halt work for a total of eight weeks before the end of September, impacting about 500 workers at the plant, GM spokesman Dan Flores said.
The plant will be shut for a week each month, except July, when the facility is closed for an additional two weeks for the annual summer shutdown, when all plants are closed.
WEAK ECONOMY
The weak economy is causing small businesses to curtail investments in capital goods. An outfitter which converts GM's commercial truck chassis into a dump truck or a tow truck or another application, can charge $100,000 for each vehicle, Flores said.
GM also said it will halt production for two weeks at its Wilmington, Delaware, plant, where it makes the slow-selling Saturn L Series mid-size car.
GM's two-week shutdown of its Wilmington plant will impact about 1,300 workers. Total U.S. sales of the Saturn L Series, competing in the competitive mid-size segment, fell 17 percent last year to 81,172.
Despite those cuts in production, GM still expects its total vehicle production in North America in the first quarter to grow to 1.43 million vehicles, up more than 5 percent from 1.353 million a year ago.
Several GM plants will work overtime next week, including its Arlington, Texas, and Fort Wayne, Indiana, full-size pickup truck plants.