Incentives For All

It wasn't long ago that low-interest financing, cash rebates and other incentives were the exclusive province of Detroit's Big 3 auto makers as a necessary evil to move the metal.

No more. Luxury brands Mercedes-Benz, Land Rover and even Porsche have discovered the allure of incentives that their downmarket rivals can't live without. With the model year coming to an end, the pressure to clear out U.S. showrooms is even greater.

The Land Rover unit of Ford Motor Co., for instance, is offering low finance rates and special lease deals for its entry-level Freelander SUV. Land Rover is hoping a strong U.S. market will make up for Europe's lower-than-expected demand for Freelander.

Porsche AG President and CEO Wendelin Wiedeking recently lashed out at executives of the company's U.S. arm for offering 52,000 members of its Porsche Car Club a $1,000 incentive off the purchase of an '02 Boxster. The incentive was announced in July.

Wiedeking was especially angry to learn of the marketing tactic during a media briefing with the automotive press before the production launch of the new Cayenne SUV at the auto maker's new assembly plant in Leipzig, Germany.

The incentive action goes against the foundation Porsche was built on, Wiedeking says, and could deplete Porsche's stance as one of the highest residual value brands in the world. “We did not know about it. It will not happen again,” he told reporters.

Porsche Cars North America President Fred Schwab, who was at the briefing, acknowledged afterward that the Boxster offer wasn't done with the knowledge of the German executive team. The incentive offer, he says, was made to help improve sales of the Boxster as a refreshed '03 model prepares to enter the U.S. market later this year.

The offer only was made to members of the Porsche club, he said, adding: “There's always huge price pressure in America. It's never been an easy game.” Wiedeking, however, insists the Porsche will not sacrifice short-term sales growth for robust profits.

One of the penalties that-global auto makers often pay for their far-flung operations is being unmindful of the market pressures of individual countries in which they sell vehicles. Such could be the case with Porsche.