General Motors Corp. joined the rest of the domestic auto industry Wednesday in offering discount financing on its small cars.
Meanwhile, GM stock was sharply lower in active trading on the New York Stock Exchange Wednesday as brokerage houses reduced their 1985 earnings estimates for the automaker. GM stock was down more than $2 a share in early trading.
Scott Merlis, with Shearson Lehman in New York, said GM has called analysts to tell them plant changeover costs would be higher than expected and certain engineering costs that had previously been capitalized may now be expensed, two factors that will affect future profits.
Merlis lowered his first-quarter earnings estimate for GM to $3.50 a share from $4 and for the year to $13 to $14 a share from $14 to $15.
GM said it was offering the sales incentive because its domestic rivals already have such financing programs in effect, not because it has stockpiles of unsold cars in inventory. In the three 10-day sales reporting periods since GM`s rivals introduced discount financing, their sales have soared, while GM sales have lagged behind the year-earlier periods.
GM said there was no significance in the fact that the discount financing program happens to extend through April, the first month that import quotas on Japanese cars will be lifted.
The GM program provides 8.8 percent financing on new 1985 or leftover 1984 model subcompact Chevrolet Cavalier, Buick Skyhawk, Olds Firenza, Pontiac Sunbird, Cadillac Cimarron and Pontiac Fiero models purchased from existing dealer stocks beginning Wednesday through April 30.
GM spokesman Harold Jackson said cars previously ordered and delivered through April 30 will also be eligible for the 8.8 percent rate.
Jackson said the financing program was offered ”to be competitive” with its domestic rivals. ”Sales of our small cars have been good, and the Cavalier is our best-selling car, but the others are offering low-interest financing,” he said.
Cavalier inventory is at a 53-day supply in dealers` hands, Skyhawk 56 days, Sunbird 64, Cimarron 76, Firenza 82 and Fiero 78. A 60- to 65-day supply is considered normal.
After Chrysler Corp. began offering 8.8 percent financing on its Omni/
Horizon in mid-February, sales increased. Ford Motor Co. followed with 8.8 percent financing on its compact Tempo/Topaz, and sales jumped more than 50 percent. American Motors offers 8.5 percent on Alliance/Encore and Tuesday added a 5-year/50,000-mile warranty. Despite incentives, however, AMC sales have fallen sharply behind year-earlier levels.
