Pontiac Offers Insurance Subsidy to Boost Firebird Sales : Incentives: GM division tries to spark a lagging market by paying half of the car buyer’s high deductible on a claim if the driver has an accident.


The auto makers are using plenty of gimmicks to boost their sluggish car sales, such as cash rebates to buyers, low financing rates and dealer incentives. Now, Pontiac has come up with a unique one: It will effectively subsidize the car insurance for buyers of new Firebirds.

Pontiac, contending that high insurance bills block some people from buying Firebirds, is trying to remove that stumbling block with a new offer to help pay the deductible (the part of an insurance claim that a driver must contribute) if the driver has an accident. The car itself carries a suggested retail price of from $12,690 for the base model up to $24,530 for the higher-performance Firebird TransAm.

But the incentive offered by Pontiac, a unit of General Motors Corp., is not catching fire with the rest of the industry. Ford, Chrysler, Nissan and Toyota all said they had no plans to offer a similar incentive.

Even Chevrolet, which builds the Firebird’s sister sports car, the Camaro, is not offering any such insurance aid, Chevrolet spokeswoman Suzanne Kane said. She declined to elaborate. Both the Firebird and Camaro are built at GM’s assembly plant in Van Nuys, which is temporarily shut down because of bloated supplies of the cars. The Camaro historically outsells the Firebird by nearly 2 to 1.


The Firebird and Camaro are cars that carry high performance and commensurate high insurance rates, because their drivers have a history of testing that performance and then crashing the cars. The turbopowered TransAm, for instance, can go from zero to 60 m.p.h. in about 5.3 seconds. As one insurance agent put it, a Firebird “is a loss looking for a place to happen.”

Not surprisingly, “our research indicates that many potential customers are unable to afford Firebirds because of the high cost of auto insurance in certain parts of the country,” said James D. Murray, assistant general sales and service manager for Pontiac’s Western region.

But early results of Pontiac’s insurance rebate program aren’t bullish. Morry Faiman, general sales manager of Prestige Pontiac-Subaru in Van Nuys, said potential customers view the offer “as something very positive,” and “we use it on every prospect” that’s shown the car. But he conceded, “Has someone said, ‘I’ll buy your car over a Mazda RX-7 because of the insurance plan’? I can’t say that I’ve had that happen yet.”

Pontiac’s offer, which began in late October and ends Jan. 31, 1991, is good in California, Arizona, Nevada and Texas. Here’s how it works: If a Firebird buyer has an accident or otherwise files an insurance claim for repairs to the car, Pontiac will pay half of the deductible, up to $500. The idea is to let Firebird owners take a higher deductible than they might otherwise choose when they get insurance, and the higher deductible reduces their annual insurance bills.


Pontiac will make the deductible payment only once for each Firebird owner. If the driver does not file a claim over five years, Pontiac will provide $750 toward the driver’s purchase or lease of another new Pontiac.

There’s no question that insuring a Firebird in California is expensive, particularly for the under-30 driver that is the Firebird’s bread-and-butter customer. And the cost of insuring the TransAm adds several hundred, if not thousands, of dollars to the driver’s annual insurance bill compared with the standard Firebird.

An Allstate Insurance agent gave this example: A 27-year-old single man, living in the San Fernando Valley and with an unblemished driving record, wants full coverage for a standard 1991 Firebird that costs about $16,000. If he signs up for a $250 deductible, he’ll pay $2,874 a year for insurance.

That’s $240 a month, which is nearly the same monthly payment the same driver would have to make if he bought a $16,000 Firebird with 10% down and a $14,400, 5-year car loan.


And in the case of Allstate, at least, Pontiac’s offer provides little help. If the same driver opted for a $500 deductible because Pontiac will help pay, his bill goes down only by $100 a year, or $8.33 a month, the Allstate agent said.

Still, there’s no question Pontiac needs to do something to help the Firebird. Both the Firebird and Camaro are suffering severe sales slumps, in part because the cars’ basic designs are nearly a decade old and because car sales in general are sluggish.

From Jan. 1 through Dec. 10 of this year, Firebird’s sales were down 30% from the comparable period a year ago, to 37,561 cars from 53,516, according to J.D. Power & Associates, an Agoura Hills research firm. (Camaro sales, meanwhile, were off 19% to 75,704 from 93,061.)

To reduce the high inventory of cars, GM last week said the Van Nuys plant’s holiday shutdown will last two weeks longer than previously announced. The plant, which closed Dec. 17, was supposed to resume production Jan. 2 but is now scheduled to reopen Jan. 14.