GM Moves to Step Up Demand With Lease-Payment Waivers

General Motors Corp. said Thursday it will waive remaining lease payments on its cars and light trucks if customers buy or lease new vehicles, as the largest auto maker tries to revive demand.

Customers whose leases expire this September through March 2002 are eligible for the waiver program, which will start today and run through July 15, said spokeswoman Gwen Knapp. The offer doesn’t include the Detroit auto maker’s Saab, Saturn or Hummer brands, she said.

General Motors’ U.S. sales of new cars and light trucks fell 9% this year through April to 1.54 million vehicles. Analysts estimate U.S. sales in May fell 6% at General Motors and 5.2% industrywide from a year ago as sales to businesses slowed and higher unemployment hurt demand.

“It looks like an escalation of the rebate war,” said David Healy, a Burnham Securities Inc. analyst in Tucson. The lease-payment waiver is “a new wrinkle. That’s not one I’ve heard before.”

GM also plans to start ending lease incentives on most 2001 models at the end of July so it can focus on 2002 models that debut this summer, Knapp said.

General Motors will encourage customers to buy rather than lease by offering low interest rates and cash incentives for purchases, she said. Details of those offers haven’t been decided yet, Knapp said.

Even with the emphasis on purchases, “by no means will we sacrifice competitiveness in leasing,” she said, without disclosing specifics.

General Motors may save money in waiving lease payments because the vehicles will be in better condition than if they had been used for the full period and will have higher residual values when sold in auctions, Knapp said.

Healy agreed that the lease waivers might result in higher- than-normal resale prices and could reduce the cost of the offer.

General Motors earlier in May announced Memorial Day rebates on some of its most profitable vehicles to boost May sales and protect its U.S. market share. The auto maker offered $1,000 cash back on some sport-utility vehicles, including the Chevrolet Tahoe and Suburban and GMC Yukon, in the second half of May.

GM also has been offering as much as $1,000 cash on several other cars and pickup trucks.

The company’s shares rose 79 cents to close at $56.90 on the New York Stock Exchange.