GM puts a lid on Impala output to boost prices

[01Malibu]

http://www.autoweek.com/apps/pbcs.dll/arti...1024/LATESTNEWS

[Paolino]

This kills me. If you read the article, it's like clearly saying "Oh, gee, fresh products produce more interest and higher prices on the sales."

Yet GM feels good ol' stale items will do just fine.

They need to open their eyes and pay attention, and update their products more often.

[CARBIZ]

We are selling lots of Impalas here. It has killed the Malibu for us. Isn't this article old news? I just read the other day that GM hasn't killed the 3rd shift yet. Are they talking out of both sides of their mouth?

[I hope GMRULES again]

That article is old news its dated March 20th. GM announced last November they would cut the 3rd shift in June 06 and cap production at 250k but I haven't heard any news about it since then. CARBIZ you said you read the 3rd shift would not be cut, got any more news on that?

[trinacriabob]

Who can answer this?

The price drop which happened on the GM cars within the last year was taken on the chin largely by the dealers, right? That means the difference between the MSRP and their invoice shrank. Their invoice didn't go down proportionately.

How would reducing output change the pricing? These damn things (and they are good cars, mind you) are in company and rental fleets everywhere. It is truly a mass production car and I think diminishing output is stupid, if they can sell them.

Yeah, just try ratcheting up the price on the fleet buyers that are accustomed to a certain price point.

[the_yellow_dart]

I think this must have been misreported in the Canadian media somewhere. A few of my friends tried to tell me they closed Oshawa altogether. I had to explain to them that they only cut the 3rd shift.

How common is it for a plant to have 3 shifts anyways?

[CARBIZ]

So is the 3rd shift dead or not?

[AJQUALITY]

So is the 3rd shift dead or not?

164881[/snapback]

[AJQUALITY]

it is on hold . will know more after shutdown

[thegriffon]

Who can answer this?

The price drop which happened on the GM cars within the last year was taken on the chin largely by the dealers, right?  That means the difference between the MSRP and their invoice shrank.  Their invoice didn't go down proportionately.

How would reducing output change the pricing?  These damn things (and they are  good cars, mind you) are in company and rental fleets everywhere.  It is truly a mass production car and I think diminishing output is stupid, if they can sell them.

Yeah, just try ratcheting up the price on the fleet buyers that are accustomed to a certain price point.

164866[/snapback]

According to AutoNation dealer margins haven't changed since they are not offering the same level of discounts they did before. It gets back to what the MSRP was legally supposed to indicate - what you should be paying for a car.

[CARBIZ]

We should be clear that there are really two sets of fleet buyers. The first being the (evil) rental companies and the (good guys) being the large companies like Coca Cola, UPS, etc. that may need cars and trucks for their employees/agents. I don't know what the actual numbers break downs are, but I suspect that the damage to image and resale value is being done by the 6 month old rental returns that only have 12,000 miles (edited for my American cousins) on them - these are the real evil, if you will.

I don't think that 25-2004 Malibus that are sold by a coffee maker in Maryland are going to destroy the Malibu's trade values.

[I hope GMRULES again]

Yeh the short term leases from the daily rental companies like Avis are what hurt the most. They only keep the cars until they have 30k kilometers on them and then they turn up at the dealers used car lot for 7-8 thousand less than a new one.

[WCCPSGM]

This drives me crazy. They want to sell the top trim level, but they are Chevrolet. They are supposed to produce the AFFORDABLE vehicles! I know success with 40K tahoes can cloud your vision, but the Tahoe has few true competitors. The top Impala begins to compete with luxury cars pretty soon. That used to be Oldsmobile's job, but hey, who needed them right? Especially when the company with a rep for lackluster plastic coated cars can do the job just as well!!!

The fleet thing is a catch 22. Any economist or other "money" expert usually satrts off their tips for making money by saying "Don't buy a new car, buy a program car." The Impala is an incredibly compelling program car, its big, powerful, and thanks to low initial prices and depreciation, a knockout bargain on the used market. If you reduce your, fleet sales: a. will you be able to convince those buyers to buy a new car instead, b. will you be able to keep dealers in line, many of whom rely on used car sales for the bottom line and LIKE 12000 mile fleet vehicles, and c. can you deliver a premium produt to draw away the competitors products. If you can't do all three, your only hurting yourself.

The Impala simply has trouble competing with Camry and Accord in several key areas. 1st, it doesn't have the legion of loyalist who will buy anything under the marquee. 2nd, it has a 4 speed against cars with 5 and even 6 speed trannies. 3rd, after several Datelines showing how great side airbags are, the competition offers them standard, while they are options on Chevies, along with ABS. I looked at the website today, they were touting 5 sar ratings from the gov. Newsflash chevy, the Japanese's customers EXPECT that, they assume its true and are unimpressed by companies touting it as if it were a major accomplishment. Kia, of all people, just released the safest minivan in history, Hyundai sells cheap cars with a long list of standard safety equipment, and Chevy will have trouble luring safety minded parents from those lots with the current Impala.

The Impala has a huge advantage in size and price though, if GM will just meet the competition head on, they have a winner.

I agree totally on updates. If Chevy would update its cars every three years, with a redesign every 6, they will be able to stay on top of the competition.

The Tahoe is great, but if gas continues to go up, they can't count on Tahoe sales. Eventually, gas will be so high as to hurt even Tahoe sales.

[ehaase]

Moving the Impala upscale a tad makes all the sense in the world. It creates room for a greatly improved, more upscale 2008 Malibu and gets things ready for the more expensive Zeta Impala, hopefully out for the 2010 model year.

[CARBIZ]

The Impala has side curtain air bags standard on all models. The LS/LT don't have standard ABS because GM already walked that line for 10 years and nobody gave a damn then. Besides, the Allure (of whatver it is called down south) has ABS standard, as it should.

The problems all started when Chevy introduced the Caprice in 1966, to compete with Ford's LTD version of the Galaxy. Money was to be made by throwing carpet on the kick panels of the door and fancier vinyl seats, then the race was on in price and toys.

At $23k, the Impala is about $2,500 less than a base Camry and although they are similarly equipped, I'd take the 3.5 6 cyl over a 4 cyl any day.

[WCCPSGM]

Funny. I looked at two brand new LS's today on a lot. Niether had side airbags. Dealer said they didn't come with them.

[Mule Bakersdozen LS]

There's no excuse as to why an Impala, Malibu, G6, Cobalt, or even the Aveo (or any GM vehicle) ABS is not standard. If a 1992-2002 Cavalier had it standard on every single model, its at least common sense that a Cobalt or Aveo should have it standard as well. I wouldn't buy any post-1992 vehicle if it did not have ABS. Same with front and rear side air bags or whatever else is standard on a cheaper, smaller car, a la Hyundai Sonata. I like the redesigned Impala a lot-I'd like it a lot more if it were better equipped.

[VenSeattle]

There's no excuse as to why an Impala, Malibu, G6, Cobalt, or even the Aveo (or any GM vehicle) ABS is not standard. If a 1992-2002 Cavalier had it standard on every single model, its at least common sense that a Cobalt or Aveo should have it standard as well. I wouldn't buy any post-1992 vehicle if it did not have ABS. Same with front and rear side air bags or whatever else is standard on a cheaper, smaller car, a la Hyundai Sonata. I like the redesigned Impala a lot-I'd like it a lot more if it were better equipped.

166434[/snapback]

The Impala is well equipped. ABS is available on all models, and standard on the LT3, LTZ, & SS. By 2010 ABS, TC, & ESC will be standard on every GM vehicle.

Funny.  I looked at two brand new LS's today on a lot.  Niether had side airbags.  Dealer said they didn't come with them.

166428[/snapback]

WCCPSGM - There's a difference between 'Head-Curtain Side-Impact' airbags & 'Seat-Mounted Torso Side-Impact' airbags.

[WCCPSGM]

The Impala is well equipped. ABS is available on all models, and standard on the LT3, LTZ, & SS. By 2010 ABS, TC, & ESC will be standard on every GM vehicle.

WCCPSGM - There's a difference between 'Head-Curtain Side-Impact' airbags & 'Seat-Mounted Torso Side-Impact' airbags.

166481[/snapback]

Yeah I checked the website and it says they have 'em. I don't think this dealer had enough sense to know the difference. Are they new this model year? These could be 2006's still on the lot. Now they needc a five or six speed tranny, after that, the mags will be down to "ergonomics" again as the prolem with Impala. Oh, that and its "Vanilla" styling, which they loved on the Japanese cars for years.

[Gord]

That article is old news its dated March 20th. GM announced last November they would cut the 3rd shift in June 06 and cap production at 250k but I haven't heard any news about it since then. CARBIZ you said you read the 3rd shift would not be cut, got any more news on that?

164865[/snapback]

I work there and have heard nothing on the timeline for the third shift going down

[I hope GMRULES again]

I work there and have heard nothing on the timeline for the third shift going down

169663[/snapback]

But is was supposed to be and the end of June right? Maybe if Impala sales stay strong they won't cut the 3rd shift?

[The O.C.]

We should be clear that there are really two sets of fleet buyers.  The first being the (evil) rental companies and the (good guys) being the large companies like Coca Cola, UPS, etc. that may need cars and trucks for their employees/agents.  I don't know what the actual numbers break downs are, but I suspect that the damage to image and resale value is being done by the 6 month old rental returns that only have 12,000 miles (edited for my American cousins) on them - these are the real evil, if you will.

  I don't think that 25-2004 Malibus that are sold by a coffee maker in Maryland are going to destroy the Malibu's trade values.

166079[/snapback]

You are very correct.

It is the large rental fleets that do the most damage to a vehicle's residuals/resale value....primarily due to the very aggressive pricing schedules that the manufacturers work out with the rental agencies when they repurchase the cars.

Then, the rental cars go through the auction at relatively low prices....allowing dealers to then offer those "used" cars with "low" miles for a much more aggressive price.....and that makes buying a "new" one look like a stupid move....reducing the desirability of the "new" one.

SO....a used one purchased new at a dealership becomes MUCH more difficult to RESALE.....because so many of these previous rental cars are out in the same marketplace...

[Spike]

You are very correct.

It is the large rental fleets that do the most damage to a vehicle's residuals/resale value....primarily due to the very aggressive pricing schedules that the manufacturers work out with the rental agencies when they repurchase the cars.

Then, the rental cars go through the auction at relatively low prices....allowing dealers to then offer those "used" cars with "low" miles for a much more aggressive price.....and that makes buying a "new" one look like a stupid move....reducing the desirability of the "new" one.

SO....a used one purchased new at a dealership becomes MUCH more difficult to RESALE.....because so many of these previous rental cars are out in the same marketplace...

172644[/snapback]

Is their a difference in the effect of fleet sales between cars and trucks on residual/resale value? The proportion of cars to trucks at rental fleets appears to be very high. Whereas construction companies, for example, mainly have trucks that are not turned over after six months. It would seem to me that the supply, based on a percentage of sales, of "used" "low" miles trucks would be much less than cars.

I think that it should also be noted that a dealer's profit margin on a used cars is significantly greater than new. Therefore, a dealer is much more likely to push slightly used product to a customer who is considering something new.

[CARBIZ]

But there are really two sets of customers out there: the Cash Customer and Everybody Else.

The CC can save $5-7k on a used vehicle because he/she is paying cash.

EE can save $5-7k on a used vehicle and then watch as half of that goes back to the bank in the form of interest charges.

Depending on which type of customer the person in front of you falls into, they are either a new or a used customer. A new Malibu at zero percent is most likely a better over all deal than a 2006 used one with 20k on it at 8%! It just depends on the situation.

Although it is true the dealer can make more on used vehicles, it isn't really the 1 year old daily rentals that are the cash cows - volume, yes, but not necessarily profits. A savvy customer can shop a used 2006 Malibu as easily as a new one, since most dealers would have several on the lot in different colors. If a dealer is lucky enough to be the only one to show up to an auction, then he can get a good deal by buying the vehicle for cheap, but that doesn't happen very often.

This is one area where the imports are actually the robbers. Our sister Toyota store makes nearly double per unit on their used car side than we do, yet we make more on the new car side than they.

We are more likely to make more profit on a 2000 low mileage LeSabre than a 2006 used Malibu.