GM won't revive employee pricing

[Flybrian]

GM won't revive employee pricing

For now, the carmaker wants to focus on lower vehicle prices while Ford, Chrysler push discounts.

Brett Clanton / The Detroit News

Link to original article @ DetNews.com

DETROIT -- After letting a no-interest financing promotion expire Wednesday, General Motors Corp. is resisting the temptation to roll out another big summer sales promotion -- for now.

GM told dealers this week it will reinstate until July 18 the rebates and low-interest financing deals that were in place before the automaker's "GM 72 Hour Sale" launched nationwide on June 27.

The automaker has not said what it will do after that. But officials are clear on one point.

"We have no intention of going back to employee pricing," said GM spokesman John McDonald.

Last summer's employee-pricing-for-everyone promotion was hugely successful for GM. But the automaker said in January that it wants to move away from big discount programs, which erode resale values and confuse consumers. Instead, its goal is to price vehicles closer to what customers actually pay.

But sticking to the strategy may prove difficult this summer.

DaimlerChrysler AG's Chrysler Group has a new employee-pricing deal that offers zero-percent financing and a 30-day return guarantee. And Ford Motor Co. has a program that offers cash rebates, no-interest financing and free fuel for six months on most Ford vehicles. Both programs expire at the end of July.

Some GM dealers wonder whether GM will be forced to offer a more aggressive discount plan in coming weeks if Ford and Chrysler draw buyers with their promotions.

But Tom Waurishuk, sales manager at a Saturn dealership in Stamford, Conn., said he hopes GM sticks to its guns and tries to get off the incentive roller coaster.

"You can't keep doing it," he said, "because it's a never-ending cycle."

GM's lower-rebate strategy has had mixed results so far this year. While customers are paying slightly more for GM vehicles and residual values of some models are improving, the company's sales are down more than 12 percent through June.

Yet GM may have gotten a boost from its 72-hour sale. That program, which offered zero-percent financing for 72 months on most 2006 models, was a runaway success, said GM dealers.

Steve Cook, owner of Cook GM Superstore in Vassar, said the program turned what is traditionally a slow week into a hot one. Cook said he usually sells about eight new vehicles during the first week of July.

"This year, I'm pretty darn close to 40," he said.

And while the campaign has expired, it is still luring buyers, he said.

Tammy Hess, 30, said the promise of a good deal helped sway her to purchase a 2006 Chevy Malibu sedan on Friday.

"I had been looking for a while," she said, "and then I heard about the deals."

GM will continue to offer zero-percent financing for 72 months on select 2006 model-year SUVs, including the Chevy Trailblazer and Chevy Tahoe.

The automaker is trying to reduce its overall incentive spending as part of a sweeping turnaround plan. But GM's McDonald said the company will keep offering "tactical" rebates in competitive vehicle categories as needed.

You can reach Brett Clanton at (313) 222-2612 or [email protected].

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Tactical rebate "strikes" versus strategic "carpet bombing" of incentives is what GM needs, IMO. Use better and bigger rebates on a few leftovers as necessary and give dealers the flexibility to get stale models off the lots while keeping rebates low on new models that should sell themselves anyway.

[76ChevyTrucker]

Now this I have to agree with. I like the idea of using only small "tactical" rebates on cars and get people to realize that GM is making a lot better cars than what they'd produced years ago. Having the residuals come up on them is also a good thing.

[Drew Dowdell]

having residuals rise should help cheapen leases without the need for <as much> subsidizing....

[knightfan26917]

Hmm....it will be interesting to see if GM can keep resisting the temptation to match the programs by the other companies.....

Cort, "Mr MC" / "Mr Road Trip", 32swm/pig valve/pacemaker

MC:family.IL.guide.future = http://www.chevyasylum.com/cort/

Models.HO = http://www.chevyasylum.com/cort/trainroom.html

"That's the price that we all pay" ... New Order ... 'True Faith'

[Newbiewar]

Hmm....it will be interesting to see if GM can keep resisting the temptation to match the programs by the other companies.....

Cort, "Mr MC" / "Mr Road Trip", 32swm/pig valve/pacemaker

MC:family.IL.guide.future = http://www.chevyasylum.com/cort/

Models.HO = http://www.chevyasylum.com/cort/trainroom.html

"That's the price that we all pay" ... New Order ... 'True Faith'

164761[/snapback]

Rummor is... 0% is back on friday...

[GMTruckGuy74]

...Use better and bigger rebates on a few leftovers as necessary and give dealers the flexibility to get stale models off the lots...

The problem with "dealer cash" is that it's hidden from consumer's knowledge. When I worked at a Buick-Pontiac-GMC dealership back in '99 & '00, the sales manager would only use the "dealer cash" if the customer was ready to walk out. And then he didn't even give them all of the amount - say the dealer cash was a $1000, he'd offer the customer $500 so the delaership would get the other $500 (I guess they billed GM for the whole amount and the customer only got half).

I see no problem using rebates or low/zero interest rates - not hidden dealer cash - to move the leftover, stale 2006 models though.

[CARBIZ]

Raising residual values only shifts the pain to 3 or 4 years down the road. GM has been more successful with "under the radar" programs up here in the Hinterland. They have been doing a lot of direct mail to customers, things like the $1,500 Oldsmobile Loyalty credit, $1,000 for the owners of a J-car to upgrade, Car Heaven ($1,000 guarantee for any old wreck - even if it doesn't start!)

We were told sales are up 4% in the GTA - no mean feat, considering Hyundai and Kia are very strong in the GTA - even SmartCar does well here!

[MyerShift]

Finally. I am very glad that GM has the faith in their product that they do not require discounting, that they are worth the price on the window.

Although details need ironed out in several cars, new-age GM has some great products.

[knightfan26917]

Rummor is... 0% is back on friday...

Hmmm....well, if that's true ... that sure didn't take long, did it?

Heh.

[76ChevyTrucker]

I hope that 0% only comes back for maybe a week or so to again help move some left-over inventory. After that, stick to what's there, and keep the "small, surgical" rebates on what's still there after that.

[Newbiewar]

I hope that 0% only comes back for maybe a week or so to again help move some left-over inventory.  After that, stick to what's there, and keep the "small, surgical" rebates on what's still there after that.

165299[/snapback]

if it does, i'd say for them to wait...

wait until inventorys start getting bigger again... a lot was blown out durring that incentive... we did a 137 cars durring 5 days... and almost 200 cars durring that promotion, we're almost out of 2006 crewcabs... plenty of 2007's but..

[Imaj]

That's a smart plan, discounts and rebates hurt the car's image and residual price.