A generous cash incentive is helping Utah auto dealers boost sales and clear out overstocked inventories of the Suzuki Samurai, which has suffered a severe slump in sales since a national consumer group labeled the four-wheeled drive vehicle unsafe.
Trying to right the reputation of its troubled Samurai, American Suzuki Motor Co. has told dealers to slash $2,000 off the price they pay for Samurais sold through Sept. 2 and use the extra cash anyway they want.Associated Press reported the $2,000 deal as one of the most generous incentives ever offered to American car dealers, and Utah's two Samurai dealerships agree.
"I've never seen a deal this large before," said Tim Hamcock, assistant manager of Rick Warner Subaru.
"This is pretty heavy," added Brent Brown, general sales manager for Stephen Wade Automotive Group.
U.S. sales of the small, jeeplike Samurai plunged 70.6 percent in June after Consumers Union said the vehicle was dangerously apt to tip over when the driver swerved back and forth to avoid an accident.
Utah sales slipped by about half of the national drop since the report.
Warner and Wade are already using the extra cash to supplement advertising and lure buyers back with lower prices.
Hamcock said Warner is using the money as a means to cut more deals, using it either as a down payment on a Samurai, or, for those buying with cash, a $2,000 cut in the price.
Since initiating the incentives July 13, sales have jumped to two or three Samurais a day, compared to three or four sold in a week previously. Hamcock said the $2,000 rebate should clear out Warner's inventory of 70-80 Samurais.
Brown said his dealership began using the extra cash to bolster its advertising budget for the Samurai and lower prices by as much as $1,000.
"I expect this month and August to be barn burners and frankly I don't look forward to Sept. 2," he said.
The incentive amounts to 25 percent of the $7,995 base price of the Samurai. That is one of the largest percentage incentives ever in the auto industry, said Maryann Keller, an analyst for Furman Selz Mager Dietz & Birney.
"It's a very smart thing to do," Ms. Keller told AP. She predicted an extremely low price could override some people's lingering doubts about whether the vehicle is too tippy.
However, she said the Samurai's future depends on how the news media handle the story about the Suzuki's safety. Videotape of the Samurai tipping over in driving tests, frequently repeated on the television news, has had a strong impact on potential buyers, she said.
In Ohio, the state's 10 Suzuki dealers are using the extra cash to offer free, $1 million accidental life insurance policies for one year to all Samurai buyers. The policies pay $1 million to beneficiaries if the holder is killed when a Samurai rolls or tips over.