The announcements are blunt, perhaps even desperate. A recent full-page ad by DaimlerChrysler in the Toronto Star blares, ‘First time ever – 0% purchase financing for up to 60 months.’

Those ads used to work: According to the Toronto-based Canadian Vehicle Manufacturers’ Association, 2002 was a record year for vehicle production at over 2.6 million units. Unit sales totaled over 1.7 million. But after a year of 0% financing deals, such offers have become the price of entry, and the run on showrooms has tapered off.

So far this year, unit sales at North American manufacturers General Motors, Ford and DaimlerChrysler are well down from June 2002. Car sales are down 11.4% and light truck sales have dropped 11.2%.

DaimlerChrysler Canada, headquartered in Windsor, Ont., says it would like to move away from incentives pricing, but the competitive nature of the market has forced the carmaker into it.

‘Earlier this year it was not our strategy to use incentives so aggressively,’ says Paul Fleet, manager, product public relations. ‘Rather, we would prefer to add content and enhance the product to increase its appeal. Our use of incentives has become increasingly aggressive in light of very aggressive use of incentives by competitors.’

A resigned Pam McLaughlin, manager of public relations at General Motors of Canada in Oshawa, Ont., adds, ‘It’s a very competitive business and you’ve got to do what you’ve got to do to stay competitive.’

Well, you know what they say – when in doubt, blame it on 9/11.

That’s the date to which Richard Cooper, executive director of Toronto-based automotive analyst J.D. Power & Associates, traces the avalanche of 0% percent financing deals – the period immediately after the attacks when the American economy slumped. The instigator? Cooper points to General Motors, the world’s largest carmaker.

‘The domestic automakers had to do it because they were seeing their share erode over time and what they were trying to do was get [some of it] back. A lot of the foreign automakers were actually increasing in share so they didn’t see the need to [go to 0%].’

Cooper doesn’t expect the carmakers to back off the aggressive pricing any time soon but says that when they do they’ll have to focus on quality to avoid more damage to themselves.

‘It depends how they stop it. And things will have to be working together for them. They will have to have good product and they will have to go to market in a very positive, appealing way.’

However, adds Cooper, ending the sweet deals will hurt share in the short term. ‘They will lose more share, probably not to the other domestics but to the foreign competitors,’ he says.

On the other hand, the current strategy is a potentially expensive tactic, but one the biggest players are more likely to survive unscathed, according to Dean Mullet, Canadian auto practice leader at Toronto-based PricewaterhouseCoopers. Institutional interest rates have been low the past couple of years and so the expense to carmakers of offering unheard-of deals to consumers is bearable – at least in the short term. ‘It’s not as tough on [carmakers] as people believe. Mind you, the deeper the discount, [the more] it hits the bottom line,’ says Mullett.

As long as automakers continue down this road, agencies are going to be stuck producing ads that have little to say about how a vehicle speaks to a buyer’s aspirations. And consumers will continue to get pounded over the head with creative that has reduced cars to commodities. Creatives say the carmakers are taking a wrong turn.

‘It is so much the wrong way to go that it’s staggering,’ says Norm Lehman of market influence firm Reservoir Project in Toronto. He says people think in non-verbal, non-logical ways and that emotion plays the greater role in decision making. Carmakers have to capitalize on that. ‘Particularly on a purchase that is so important to things like self-image, lifestyle, relationship to your family, your kids, your community – car purchases are in that category.’

So what’s a carmaker to do? Three observers offer their advice.

Norm Lehman, co-founder, Reservoir Project, Toronto

Buyers are on to [incentives pricing]. They’re using that awareness to beat up a whole industry. A smart consumer can walk into a showroom and play one dealer against the other and walk away with prices that are beggaring the dealerships. They [dealers] talk less and less about quality of car, quality of experience…. The whole company is acting like a salesman rather than as a marketer.

It’s very tough to turn around. It’s not impossible, because at the end of the day, people are still interested in a broader set of things than merely price. Consumers are interested in quality, in environmental responsibility and impact. The whole industry has to wake up to that. They have to wake up to the fact that they are not selling a commodity – they are selling something that’s very special and important to people’s lives.

The Japanese [automakers] are less subject to the price-driven decision because they’re firmly entrenched in a quality position. The higher the perception of the quality of your product, the less sensitive it is to price. And they’re enjoying the fruits of having invested so much time and energy and marketing effort into quality.

I think [the car makers are] going to hurt badly if they have to back off [0% financing]. But the counterbalance is, if they have a product the consumer wants, then they’ll be able to sell it.

Donna McCarthy, co-CD, Target Marketing & Communications, St. John’s, Nfld.

Mini’s doing a great job [with] image advertising. And I think it’s working.

I think [with others] there’s an assumption that you can get 0% and, if not that, then 1.9%. I think you’d walk away if you couldn’t. So do [the carmakers] have to say it any more? Perhaps not. Therefore, you can go out there and start talking image because the price of entry is 0%. Then as a result you get to zig and go the other way and try and make your car cool, which is what Mini is doing.

Expect people to be smart enough to know that of course you’re going to get a great deal on this car, but it also says something about who you are if you drive it.

Frank Palmer, CEO, Palmer Jarvis DDB, Vancouver

It’s no different from department stores. There’s no way I’m going to go to a department store and buy something unless it’s on sale… If I was to buy an American car there’s no friggin’ way I’m going to buy it at full price – I’m going to wait for the next 0% financing deal. They’ve ruined their business. Make a better product!

[The foreign carmakers] just have a better product and the consumer knows it. They know the value they’re going to get from a foreign car and the only reason that they’ll go off what they really want is someone will come around and offer them a big discount.

If you look at car advertising on television or in the newspaper, it’s very similar. There really isn’t anything unique any more. When was the last time you were able to drive your car down a field at a real high speed and just turn it so you’re going down the road sideways? Every car commercial is showing a car skidding on its side with the wheels spinning and throwing up sand or whatever it happens to be. When was the last time you did that? Never.

I think creative can make a difference in bringing awareness to a product but the problem is today more consumers than ever before shop the Internet and they’re price conscious and quality conscious. So they know when they walk into a showroom what kind of car they want and what they’re expecting before they get there.