GM to Extend Offer of Interest-Free Loans

DETROIT — General Motors Corp. on Monday extended its offer of interest-free loans on new vehicles until Jan. 2, putting pressure on other auto makers to do likewise despite the burden of eroding profit margins.

It was the second extension of the financing program that the world’s largest auto maker launched to boost consumer confidence and sales after the Sept. 11 terrorist attacks.

GM’s program, which unleashed an industry price war, has been matched until now by Ford Motor Co. and the Chrysler side of DaimlerChrysler.

It also forced some foreign auto makers, including Toyota Motor Corp., to offer loan deals of their own.

The special financing has been credited with lifting U.S. auto sales to a record pace in October.

But the deals also have prompted repeated warnings from Ford--which blamed low-interest loans for a roughly $2-billion rise in its marketing costs in the third quarter--that the costs of zero-and low-interest loans are unsustainable.

The latest GM program will be available on some but not all 2001 and 2002 Pontiac, Oldsmobile, Buick, GMC, Chevrolet and Saturn models, except for Cadillacs, Corvettes and the upcoming Saturn Vue sport-utility vehicle.

GM said it was offering interest-free financing exclusively on three-year loans on passenger cars, however.

Under the previous program, which was more generous to consumers, some GM deals offered four-and five-year loans with zero interest on a wider range of vehicles.

In the latest offer, GM also raised the interest rates by one percentage point on longer-term loans for most 2002 models.

Ford’s 0% financing program is set to expire Nov.20, and Chrysler has stretched its deals until Nov.19.