By Randy Tucker
The Cincinnati Enquirer

Mustangs are available on a $5-a-day lease. Dave Green, general sales manager at Kerry Ford, has 77 on the lot. (Tony Jones photo) | ZOOM |

Weak vehicle sales, coupled with a struggling economy, have led some auto industry analysts to lower their estimates for new-car sales this year.

But local auto dealers entering the busy spring selling season are flaunting incentives that they say are too good for Tristate consumers to ignore.

Greater Cincinnati Automobile Dealers Association members represent about 90 percent of new-car sales in the Tristate. It said new-car sales fell 12 percent to 107,000 cars last year, compared with 122,600 cars sold in 2001.

Nationally, new-car sales fell 5 percent last month for the third straight monthly decline.

That has forced dealers to "do what they have to do'' to move vehicles, said Ace Ammann, executive vice president of the dealers association.

Low-interest financing, a staple of the auto industry for several years, will continue. But that's only part of the incentive story, which is "a whole lot better now than it ever has been,'' said Jim Bloebaum, general manager at Kerry Ford on West Kemper Road.

The Big Three automakers - General Motors Corp., Ford Motor Co. and DaimlerChrysler - have extended their zero-percent financing contracts to five years or are offering cash rebates from $3,000 to $4,500 on most models. That includes popular models such as the Chevy Corvette and Chrysler PT Cruiser - cars once considered too hot to need incentives.

And the sweet deals don't end there.

A shaky stock market, high unemployment and low consumer confidence have made consumers so reluctant to part with their cash that even zero-percent financing isn't attracting enough buyers, leading some automakers to take special measures.

Ford - which is struggling to regain profitability - recently introduced a $5-a-day lease for certain versions of its Mustang and Ranger pickup.

The 48-month-lease, which requires a 10 percent down payment, is tied to the company's 100th anniversary in June, which will commemorate founder Henry Ford's introduction of the $5-a-day wage and 40-hour workweek.

"Everybody is looking for the most value for their dollar,'' said Bloebaum, who said he has already sold several cars on $5-a-day lease. "This is a great deal from Ford.''

Even the highly competitive Asian automakershave found that they have to offer incentives to keep pace.

Mitsubishi, for example, is offering a special deferred financing program in which customers can postpone payments until 2004 with no down payment and no interest. Participants in the program are also eligible for a rebate of up to $1,000.

In addition, Mitsubishi dealers are offering zero-percent financing or cash rebates of up to $3,200 on many models, including the 2003 Montero, Eclipse, Galant, Montero Sport and Diamante.

Most of the special offers will end this month or in early May.

But experts say consumers can expect such deals to reappear periodically as long as the economy remains shaky and car sales continue to slide.

"The entire market is hooked on incentives and is unlikely to get off of them anytime soon,'' Van Bussman, a former corporate economist with Chrysler and now senior vice president of global forecasting for J.D. Power and Associates, said. "Manufacturers have both dealers and consumers trained to wait for more incentives.''

The persistence and growth in auto incentives in the past two years alone has been dramatic.

The average vehicle incentive for consumers has tripled in the past two years, from $500 to $1,500, according to J.D. Power, which gathers new-vehicle retail transaction data from almost 6,000 participating auto franchises in 26 U.S. markets.

Even luxury brands, such as Mercedes and Lexus, are offering low financing rates to lure buyers.

But the incentives come at a price for automakers.

"There's no question that the incentives cut into profits,'' Bussman said. "The question is whether it's less profitable to offer incentives or less profitable to cut production.''

Incentives help carmakers move vehicles.

If manufacturers stop offering incentives, and dealers can't sell their vehicles, carmakers will be forced to cut back on production and close plants, which might be even more costly than incentives.

Already, GM and Ford have announced planned production cuts for the second quarter.

E-mail rtucker@enquirer.com