It might be too late to get zero-percent financing on a new car, but consumers should continue to get interest-free deals on computers, furniture, TV sets and other big-ticket merchandise, a long-standing tradition in the retail industry.
But merchants are unlikely to be as generous as they were this past holiday season, when stores including Home Depot Inc. extended the terms on no-interest loans and made them available on a wider selection of merchandise.
"There is a lot of hope and expectation that the economy will improve by mid-2002," said Pat Fitzpatrick, principal at Kurt Salmon Associates Inc., a retail consulting firm. "Retailers are buying more carefully and trying to be smarter with promotions. They don't want to extend themselves."
Meanwhile, some manufacturers, including Dell Computer Corp., have recently offered no-interest loans to corporate customers as a way to boost corporate business in a recessionary environment.
The latest is Sony Electronics' Broadcast and Professional Co., which sells such offerings as video conferencing equipment and digital photography products to large and small businesses, as well as techno-savvy consumers. It said Monday it is offering for the first time a no-payment, zero-percent financing plan until Jan. 1, 2003 on products of $2,000 or more that are purchased by March 29.
The offer, which Sony acknowledged was borrowed from the auto industry, is aimed primarily at jump-starting sales to small business customers that were hurt by the Sept. 11 terror attacks.
"A lot of companies have been delaying their purchase plans," said Robert Christy, a Sony spokesman. "This is an opportunity to help our customers in these tough economic times."
As for any risks to the bottom line, he responded, "We're looking to sell volume."
General Motors first
General Motors Corp. was the automaker first to offer zero-percent interest in September with its "Keep America Rolling Program," a way to boost sales that were already weak before the attacks. Ford Motor Co., the Chrysler Group of DaimlerChrysler AG and Toyota Motor Corp. followed within days.
The programs were set to expire at the end of October, but were so successful that GM, Ford and Chrysler extended them twice. GM's expired on Jan. 2 and was replaced with a $2,002 rebate program that is expected to cost GM less than the no-interest loan.
Chrysler's program ended Jan. 8, but the automaker was expected to announced a new incentive plan that will feature $2,000 in cash back on 2002 Dodge Durango sport utility vehicles. The Ford program ends Jan. 14.
Burt Flickinger, III, managing director of Reach Marketing, a consulting firm in Westport, Conn., said zero-percent interest come-ons from the auto industry were successful in the short term, but too costly for companies in the long term.
"They have to protect themselves," he said, noting that automakers feared they would lose sales in 2002 and 2003 because consumers moved up their purchases to take advantage of the incentives.
For consumer electronics and home furnishings retailers, no-interest loans are less risky, given the constant change in technology and seasonality of the product mix.
But, Flickinger warned, "companies really want to direct consumers and corporate clients on a new line of products, rather than subsidizing sales on existing products."
Merchants said they were pleased with the success of their financing deals last year, but would not comment on their strategy this year due to competitive reasons.