Car Firms Jostle for Customer Loyalty

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Battling for customer share in a price-sensitive environment, General Motors Corp., Ford Motor Co. and Chrysler Corp. all launched direct marketing campaigns within days of one another offering rebates to certain car owners.

On April 10, GM began its Loyalty First program by mailing letters to millions of original and current owners of any of its cars or trucks dating from 1986 to 1998. The letters mentioned that R.L. Polk and Associates had determined that GM had the highest owner-loyalty rate of any car manufacturer. The rebates, which expire June 30, are being offered in addition to other national retail incentives ranging from $500 to $2,500 that are available to any buyer.

"This is the first time we have gone after current owners as a group," said Donna Fontana, a spokeswoman for GM, Detroit. "We wanted to reward them for being loyal customers."

Less than two weeks later, Ford, Dearborn, MI, mailed letters offering rebates of $500 to $1,000 to an undisclosed number of current owners or leasers of many of its late-model Ford, Lincoln and Mercury vehicles. Ford one-upped GM by extending its offer to current and original owners of GM vehicles purchased since 1986. Dealers will alert GM owners through advertisements. The rebate, which can be combined with a retail incentive, expires July 2.

"We have retail programs every quarter, and we have targeted programs on a regular basis, but this is the largest targeted program that we have had in a while," said Joy Wolfe, a spokeswoman for Ford. "We wanted to make sure that our dealers could stay competitive in light of the General Motors offer."

Last week, Chrysler, Auburn Hills, MI, launched its Owner's Bonus program by mailing letters to a "a couple of hundred thousand" current and original owners of Dodge, Chrysler, Plymouth, Jeep and Eagle vehicles, according to spokesman Jeff Leestma. The company extended its offer to owners of many GM and Ford cars who qualify for their respective loyalty programs. The rebate expires July 2 and can be combined with other Chrysler incentives.

"We absolutely did this in response to Ford and General Motors," Leestma said. "Our first-quarter sales were good and sales will continue to be strong, but we wanted to protect our customers."

GM said it has no plans to target Ford and Chrysler owners with its campaign but has a number of different marketing programs in mind for the rest of the year.

"We have a group that is looking into Ford and Chrysler campaigns and seeing what impact they'll have," Fontana said. "We fully expected a response from them. When there is one good program out there, others will follow it."

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