GM, CEO says incentives were good but have to end

[Guest Josh]

The leaders of General Motors and Ford say this summer's employee discount incentives worked well, but automakers can't continue offering huge discounts. Ford chief executive Bill Ford says such incentives aren't healthy for the industry and aren't sustainable. GM's Rick Wagoner says he doesn't regret GM's starting the incentive war in June but says it hurt profits and helped Asian automakers, which typically have lower incentives. Incentives have gone as high as $4,500 per vehicle or more. A Merrill Lynch analyst says the average incentive in September was $2,600 per vehicle, but $1,600 for Asian brands.

[caddycruiser]

Incentives have gone as high as $4,500 per vehicle or more.

[post="32097"]<{POST_SNAPBACK}>[/post]

Uh, excuse me, but the insanity has gone farther than that for quite some time--back in June of '04, we got a $5,000 rebate on our '04 Suburban, and NOW, you can pick up a leftover '05 Suburban with a $6,000 rebate.

Then again, these trucks are the best examples of insane overpricing. Only a couple years ago, the MSRP of a fully-optioned, 4wd beast of a Suburban was in the low 40's. Now, the same Suburban, save some cheaper leather, new wheels, and a few different buttons on the dash can hit $54k, and near $58k in new LTZ trim--and remember, these are still 1/2-ton models. :o

Saying "Total Value Promise" is getting damn old and, because they can't drop the prices of existing models, pointless to continue harping on. Carve as big of a chunk out of the MSRP's as used to be reserved for a rebate, cut even more out if it's a big SUV such as described above, pack them with as much stuff as you possibly can, and offer a longer warranty, and you just might get some where.

Hmm....sounds a lot like thriving Hyundai/Kia anymore, doesn't it :rolleyes:

[cmattson]

It's interesting to note that Asian incentives have risen during that period as well; which means the Asian competitors were marginally increasing their incentives to dilute the effectiveness of GM/Ford's onslaught.

[CARBIZ]

Sticker prices on 2006 models have dropped, while content has increased - that much, at least, is true. 2005 models are irrelevant at this time because it only makes sense that previous year models need something to help move them. It is giving away CURRENT year product that hurts.

[caddycruiser]

Sticker prices on 2006 models have dropped, while content has increased - that much, at least, is true.  2005 models are irrelevant at this time because it only makes sense that previous year models need something to help move them.  It is giving away CURRENT year product that hurts.

[post="32152"]<{POST_SNAPBACK}>[/post]

True, but the changes haven't been significant enough to trully capture the attention of a lot of buyers. Cases include making airbags and ABS standard that should have been that way all along (the Lacrosse), NOT having standard ABS in the freakin' '06 model year and complete redesign of the Impala, unless that is, you get into the higher-end, loaded models.

And these are only in addition to more severe problems of year old minivans that seem about 5 or 6 years old, cars like the Malibu that are technically fresh, but seem like an old, boring dog in every other aspect, GMT-360's that have nice powertrains and styling, but drive like old, floaty 60's & 70's Caddy's and have the "antique" fit & finish to match, etc., etc.--those problems even a significant price drop has trouble overcoming.

[mjd1001]

Well, it is going to be VERY hard to lay off the incentives again. There have been articles that the sales of the 2006 models in October are awful so far...possibly the slowest October in 13 years. Also, have you driven through a Pontiac or Chevy lot lately? The slow sales show. The local dealerships there are jammed with cars, you can't even drive into their back lots becuase they are so full of cars they aren't selling. Literally they can't even take deliviers of any more cars becuause I don't know where they are going to put them. Yet the factories keep producing cars...so unless they find some way to sell them, there is going to be storage problems (among others more serious than that.)

[FUTURE_OF_GM]

Also, have you driven through a Pontiac or Chevy lot lately? The slow sales show. The local dealerships there are jammed with cars, you can't even drive into their back lots becuase they are so full of cars they aren't selling. Literally they can't even take deliviers of any more cars becuause I don't know where they are going to put them.

On the contrary..

Inventories here are still very low and crappy.

My hometown Chevy dealer FINALLY received an HHR (Beautiful black LT with the chrome wheels and everything) It sat out front for 1 day before being sold.

It's the typical story with GM... The newer more desirable products are setting the world on fire, yet the less desirable (In this case, SUVs/IN past case the car side) are negating those sales gains because of stagnation.

The only way to fix this is to 1) Introduce A LOT of new product at once, which GM can't afford to do or 2) Make BETTER product and keep it updated, which GM is beginning to do.

[prinzSD]

I am not sure that lowering the MSRP will help either. People have been continioned to think of GM as what is the "great deal this week" that they will not shop GM unless there is a deal/incentive/rebate/employee pricing somewhere in the price. If the MSRP goes down even a significant amount, they will still expect a deal. GM needs to stop this madness, take the loss and recondition the masses to accept the new lower MSRP and not expect some sort of deal. It will be a tough couple of years from a sales numbers and market share perspective but GM needs to dig in it's heels and hammer home the message that their cars are worthy enough of buying without the deal. On a different note my wife has been hammering away lately that we need to sell our GM stock because of it's poor performance and I am starting to think along those lines as well. Damn sad if you ask me!

[prinzSD]

Well, it is going to be VERY hard to lay off the incentives again.

There have been articles that the sales of the 2006 models in October are awful so far...possibly the slowest October in 13 years.

Also, have you driven through a Pontiac or Chevy lot lately? The slow sales show. The local dealerships there are jammed with cars, you can't even drive into their back lots becuase they are so full of cars they aren't selling. Literally they can't even take deliviers of any more cars becuause I don't know where they are going to put them.

Yet the factories keep producing cars...so unless they find some way to sell them, there is going to be storage problems (among others more serious than that.)

[post="32168"]<{POST_SNAPBACK}>[/post]

Our Chevy dealer has virtually nothing left on the lot (it looks like a gone out of business lot) and our Cadillac/Pontaic/GMC/Buick dealer has little GMC inventory. Pontiac, Buick and Cadillac inventory on the other hand seems to be preety high. Hopefully they will rebuild the Chevy and GMC inventory.

[mjd1001]

Our Chevy dealer has virtually nothing left on the lot (it looks like a gone out of business lot) and our Cadillac/Pontaic/GMC/Buick dealer has little GMC inventory. Pontiac, Buick and Cadillac inventory on the other hand seems to be preety high. Hopefully they will rebuild the Chevy and GMC inventory.

[post="32191"]<{POST_SNAPBACK}>[/post]

I'm not sure where you guys are from, but that is not the case currently in Upstate NY. The two closest dealers to me are one Chevy Dealership and one Pontiac Dealership. Both are mid-sized. Both have an unbeleivable ammount of inventory. My previous post was not an exageration. I'd say the Pontiac Dealership has 20-30 06 Grand Prixs....about the same number of G6's, and at least as many GMC Sierras. And once again, this is not a small dealership, but certainly not a Mega Dealership.

My guess from driving though the lot every couple of days (looking to see if any more of the G6 GTP coupes have come in) is that they are maybe selling 2 or 3 of the Grand Prix's a week, yet they have to have close to 30 on the lot (including 4-5 GXP's, and none of them have moved at all since the beginning of the month)

[prinzSD]

I'm not sure where you guys are from, but that is not the case currently in Upstate NY. The two closest dealers to me are one Chevy Dealership and one Pontiac Dealership. Both are mid-sized.  Both have an unbeleivable ammount of inventory. My previous post was not an exageration. I'd say the Pontiac Dealership has 20-30 06 Grand Prixs....about the same number of G6's, and at least as many GMC Sierras.  And once again, this is not a small dealership, but certainly not a Mega Dealership.

My guess from driving though the lot every couple of days (looking to see if any more of the G6 GTP coupes have come in) is that they are maybe selling 2 or 3 of the Grand Prix's a week, yet they have to have close to 30 on the lot (including 4-5 GXP's, and none of them have moved at all since the beginning of the month)

[post="32269"]<{POST_SNAPBACK}>[/post]

I live in Antioch which is about 60 miles east of San Francisco. Our Cad/Pon/GMC/Buick is one of the larger ones in our area. The closest competitor is about 80 miles up north in Sacramento. The inventory on Pontiacs lately has not been large, I do not see a lot of GP because they are not selling. He does sell the most GTOs in the area and last month he got another 15 to add to inventory which at the time brought the inventory up to about 30 GTO according to the salesperson. I checked them out a few days later and all were auto except for 3 or 4 manuals. G6s have been in small supply, a few Vibes, no SV6, a couple of left over Grand Ams are about what make up the remaining Pontiacs but as I said earlier, other then the GTOs do not seem to be moving. (Well I have seen 2 new Torrents and 2 new G6 coupes on the road). There are too many Caddies to track but he started the year with 8 or 9 XLRs and he has only 1. He has a couple of CTS-Vs. Anything else I did not pay attention too because I am not a fan of the other stuff (that would be Buick). The reason I have an idea of stock is because I brought my TA in for an oil change and tranny fluid change so I had an hour or two to check out the inventory. Edited October 21, 2005 by prinzSD

[Guest gmrebirth]

All this talk of GM having really low inventories ... well I don't buy it. I remember someone posting a link where it showed most of GM's US plants running on OT. If seemingly there is no inventory to sell, where are all these vehicles going then? Certainly not to customers, since sales are down DRAMATICALLY in October. Even in September, sales were down compared to last year, and GM has had around 2 full months to recover inventory since summer.

[Shantanu]

Wagoner is a jackass. He ran the company into the ground with his rebates.

[mjd1001]

If seemingly there is no inventory to sell, where are all these vehicles going then?

[post="32316"]<{POST_SNAPBACK}>[/post]

If what myself and the other posts on this board are true...then the new 06 inventory isn't going to the west coast...GM must for some reason be pushing as much inventory into the lots in Buffalo and Rochester NY. :)

[thegriffon]

All this talk of GM having really low inventories ... well I don't buy it.

I remember someone posting a link where it showed most of GM's US plants running on OT.

If seemingly there is no inventory to sell, where are all these vehicles going then? Certainly not to customers, since sales are down DRAMATICALLY in October.

Even in September, sales were down compared to last year, and GM has had around 2 full months to recover inventory since summer.

[post="32316"]<{POST_SNAPBACK}>[/post]

Ahhh, I think yoiu need to think that through again - if inventories are high, they wouldn't need OT. If they are running OT then it isn't because they have too much , but because they think they don't have enough. Thus OT may be a symptom of low inventories, not high. In any case it still takes a few weeks for production to flow through to dealers.

[regfootball]

some of you still don't get it. Had GM not offered the rebates, their market share would be under 20% most likely and no one would have bought their cars. Now GM uses high MSRP's as buffers to be able to prop up higher loan values to absorb negative equity, and to catch the occasional idiot who would pay full MSRP for a GM vehicle. Otherwise, it allows them room to play with marketing incentives to create interest for otherwise non competitive cars. I think GM should lower MSRP's 10-20% across the board, but that would screw up resale values, lease residuals, etc. Plus GM needs to keep pace with the rising MSRP's of others as well. Also GM needs the higher crook prices to cover their high overhead (read: insane labor and benefit costs) Bottom line, its still about product. If you still have something no one wants, you have to mark it down to get folks to buy it. Its like that in cars, Target stores, clothing stores. So we shouldn't be moaning incentives, we should moaning that GM still cannot get new product out fast enough to make their lots more desirable.

[CARBIZ]

Lower sticker prices are a must. How many times does a customer see the sticker price and decide they can't afford it, not knowing that zero percent financing, stackable credits, etc. will lop off $6k off the price in some cases! Case in point: the 2005 Maxx has a "sticker" of $32,000 including DVD, sunroof, side air bags, etc. Yet, we are selling them for $25k and they get 60 months at zero percent. At the end of the day, that makes the Maxx cheaper than a base Camry - by far. Yet, while presenting the vehicle, the customer stares at the sticker and figures that $32k plus taxes and fees is pushing $40k and is way out of their budget. How many customers stroll by a GM lot on a Sunday and make a decision not to buy a vehicle based on the sticker?

[regfootball]

Lower sticker prices are a must.  How many times does a customer see the sticker price and decide they can't afford it, not knowing that zero percent financing, stackable credits, etc. will lop off $6k off the price in some cases!
  Case in point:  the 2005 Maxx has a "sticker" of $32,000 including DVD, sunroof, side air bags, etc.  Yet, we are selling them for $25k and they get 60 months at zero percent.  At the end of the day, that makes the Maxx cheaper than a base Camry - by far. 
  Yet, while presenting the vehicle, the customer stares at the sticker and figures that $32k plus taxes and fees is pushing $40k and is way out of their budget.
  How many customers stroll by a GM lot on a Sunday and make a decision not to buy a vehicle based on the sticker?

[post="32512"]<{POST_SNAPBACK}>[/post]

32K for a Maxx? DISGUSTING

[Cory Wolfe]

As with others here, my local dealer has an unusually low amount of cars on the lot. No 06 GPs, 1 06 G6 sedan, 2 06 Impalas, no 06 HHRs, no 06 Malibus, 2 06 Cobalts, no 06 Vibes, 4 06 Equinox's, 5 06 Aveos, a few CSVs, alot of Silverados, some TBs, 1 06 DTS, 1 06 Lax, and the rest are either left-over 05s or used. That's it. I'd just like to know why some dealers are packed full while others have very little. Why, GM?

[daves87rs]

As with others here, my local dealer has an unusually low amount of cars on the lot. No 06 GPs, 1 06 G6 sedan, 2 06 Impalas, no 06 HHRs, no 06 Malibus, 2 06 Cobalts, no 06 Vibes, 4 06 Equinox's, 5 06 Aveos, a few CSVs, alot of Silverados, some TBs, 1 06 DTS, 1 06 Lax, and the rest are either left-over 05s or used. That's it. I'd just like to know why some dealers are packed full while others have very little. Why, GM?

[post="32548"]<{POST_SNAPBACK}>[/post]

A lot depends on where the plants are...quite a few plants on the eastern end
(michigan, Ohio) so the east gets the car first..

kinda crazy like that...

[Newbiewar]

As with others here, my local dealer has an unusually low amount of cars on the lot. No 06 GPs, 1 06 G6 sedan, 2 06 Impalas, no 06 HHRs, no 06 Malibus, 2 06 Cobalts, no 06 Vibes, 4 06 Equinox's, 5 06 Aveos, a few CSVs, alot of Silverados, some TBs, 1 06 DTS, 1 06 Lax, and the rest are either left-over 05s or used. That's it. I'd just like to know why some dealers are packed full while others have very little. Why, GM?

[post="32548"]<{POST_SNAPBACK}>[/post]

also depends on your Consumer satisfaction score...

dealerships with low satisfaction often are the last to get shipments...

like us for example... we are one of the best in California... we are also #2 in volume in western USA... so therefore, our dealership is full of cars... our roof is packed like normal... and now our second parking lot is starting to fill up... then we have about 4 more parkinglots and we are back to normal =)

hope that answered your question perhaps not...

but dealerships get more cars if they have happy customers, and if they have happy customers they recomend others, and their buisness grows... so they get more cars... so happy customers = happier customers when it comes to selection... So Premiums, markups...? common thats not good buisness practices...

[CARBIZ]

Some dealerships are probably just lazy with ordering. Management is often under pressure from corporate to order more 2006 models, but some General Managers want to wait and see how the post-employee pricing unfolds. Does GM concentrate deliveries closer to the factory where they are built, or do they spread them around evenly? I remember when the redesigned Silverado came out in 1999. I had a guy call from Sault Ste. Marie Ontario, calling us because we were (are?) one of the biggest dealers in the Toronto area. He wanted to know if we had any of the new Silverados because he had seen a whole bunch of them across the river in Sault Ste. Marie, Michigan. No, I said, we don't have any - even though the damned trucks had to be shipped past our door (they are built in nearby Oshawa) on their way to Michigan! Oh, and our CSI, has historically been pretty good. The local rep can have some pull, as would the dealer principal.

[knightfan26917]

As with others here, my local dealer has an unusually low amount of cars on the lot.

Over the course of the last couple weeks, I've visited 3 different dealerships in the area. Two seem to have an abundant amount of '06 vehicles, but only certain models (Cobalts, impalas) ... and very few of others (HHR, Colorado).

The third dealership seems to be selling them as they get them in ... I'm _told_ that their inventory is _not_ abnormally low, it's just that the cars sell almost as soon as they get to the dealership.

*shrugs*

Not sure if that is the case or not...since, you'd think that if they were having that type of sales, the other 2 dealerships wouldn't have such an overabundance either....

Course, it could be the type of deals/negotations the three dealers will do or not do on the prices....


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