Ford Motor Co. , following the lead of rival General Motors Corp. , said on Wednesday that it was extending interest-free loans on the purchase of some new vehicles until Jan. 14.
It was the second extension of the financing program that Ford introduced in September, soon after GM launched zero interest loans to help give the economy and U.S. auto sales a lift after the Sept. 11 plane attacks in New York and Washington.
The program, also matched until now by the Chrysler side of DaimlerChrysler AG has been credited with propelling U.S. auto sales to a record pace in October.
Highlighting the underlying importance of the auto industry to the overall U.S. economy, the financing program also fueled a record surge in retail sales overall last month.
The Commerce Department reported on Wednesday that total October retail sales were up 7.1 percent, to a seasonally adjusted $306.83 billion, the biggest jump for any month on record, after falling 2.2 percent in September.
Excluding autos, however, sales rose just 1.0 percent. Autos traditionally account for about 22 percent of retail sales.
Following in the footsteps of GM -- which announced on Tuesday the extension of its "Keep America Rolling" program until Jan. 2 -- Ford said it was now limiting interest-free financing to three-year loans.
The program excludes Ford's new Thunderbird coupe and the fast-selling Escape sport utility vehicle. GM's program excludes Cadillacs, Chevrolet Corvettes, and the upcoming Saturn Vue sport utility vehicle.
Ford officials have complained repeatedly about the high costs of the zero-percent financing programs. But, the automaker has continually followed GM's lead, for fear of losing sales and market share to its competitor if it failed to offer the deals, analysts said.
"It's been great for the customer, it just hasn't been great for us," Ford's new Chief Executive, William Clay Ford Jr., the great-grandson of founder Henry Ford, told reporters following a speech in Kansas City on Wednesday. "We're going to have to find a way ultimately to wean ourselves from this."
Chrysler's zero- and low-interest loan program is set to expire on Monday but it is widely expected to extend it as well. Some foreign automakers, including Toyota Motor Corp. , which is offering loan deals of its own, are also likely to be feel compelled into extending bargain-basement loan deals.
Apart from high marketing costs and their corrosive effect on profitability, industry analysts and executives have said the price war that GM fired the first shot in is pulling ahead auto sales that might otherwise have been made in the next few months.
That, in turn, has prompted many analysts to warn that the industry is poised for a steep falloff in sales in the first half of next year.