GM starts Red Tag sales early

[Oracle of Delphi]

Jamie LaReau

Automotive News

November 3, 2008 - 12:22 pm ET

UPDATED: 11/3/08 3:13 p.m. EST

DETROIT -- General Motors said today it is starting its annual Red Tag sale early this year. The sale, which typically begins just before Thanksgiving weekend, will start tomorrow and run until Jan. 5.

GM also has launched a pair of direct-mail incentives programs, dealers said.

In a sales call to analysts and the media, GM marketing chief, Mark LaNeve confirmed GM would be starting the Red Tag sale Nov. 4.

"To get things going we're going to move up our traditional Red Tag sale," says LaNeve, GM's vice president of vehicle sales, service and marketing. "We typically start it Thanksgiving weekend, we're going to start it tomorrow. It'll be a net price play much like Employee Discount. We're going to have a very aggressive ad campaign a across all of our divisions."

LaNeve says GM will be more aggressive overall in its marketing. "We're going to attack the market with as much media weight as we can throw against it," he adds.

Dealers said that in previous years the dealer council had requested moving the sale up to the first week of November to be on par with competitors' programs.

"It's a stronger play than what they had last month," said Lynn Thompson, president of Thompson Motor Sales in Springfield, Mo. "They want to make sure they are out there and competitive from day one."

The sale will encompass all GM brands, including Saab, but exclude some GM products, such as the Cadillac CTS-V, dealers say. The Red Tag sale means customers will get almost the GM supplier price on most GM products, including some hot-selling products such as the Buick Enclave.

Rebates on top of sale price

The supplier price is 4 percent more than the employee price. That means a new Buick Enclave -- usually priced at $36,530 including shipping -- would be priced at $34,608 less an applicable incentive, says one Buick-GMC dealer.

And there will be rebates on top of the supplier price up to $8,500 (including dealer cash) on select 2008 and 2009 models, the dealer said.

GM is offering up to $7,250 in customer cash under the plan, GM said.

One example, the GMC 2008 Yukon XL now has $8,500 on it, says one dealer.

One other good deal is the Cadillac Escalade, Thompson says. That vehicle is part of the Red Tag sale at the supplier price, plus there is $6,750 cash on the hood and some dealer cash on top of that discount.

"This is really the first time that Cadillac, Hummer and Saab went in on this with Buick-Pontiac-GMC and Chevrolet on the Red Tag event," Thompson says. "So this is big."

As part of the sale, GM will offer a lease pull ahead of up to two monthly payments for those who are in a lease that expires if your lease expires between Nov. 4 and June 30, 2009.

Direct-mail incentives launched

GM is also launching two new incentives on most models, but they are targeted at select customers.

In a program dubbed "Garage Mate," GM is mailing an unspecificed number of $2,000-off coupons for "most" 2008 and 2009 models, according to a memo to dealers obtained by Automotive News. Those coupons will go to customers who own at least one GM vehicle and a competitive vehicle that is "modeled to be in-market for repurchase," the memo said.

The second incentive plan also is a direct mailing. GM will offer $1,500 direct-mail cash on most 2008 and 2009 models to a select list of non-GMAC loan holders who do not own a GM vehicle.

Both direct-mail programs are planned to run through Jan. 5, the memo said.

GM spokesman Johnn McDonald had no comment on the two direct-mail incentive offerings, saying: "It's a private direct-mail piece only available to people who receive it."

FACT SHEET: GM's 2008 Red Tag sales

"The Price On The Tag Is The Price You Pay"

GM is launching its Red Tag Event, where participating dealers will use red tags on vehicles to advertise their prices so customers can see at a glance the price they'll pay (including all cash back incentives) on the exciting lineup of new GM vehicles. The Red Tag Event runs from Tuesday, November 4, 2008 through Monday, January 5, 2009. Here are the details:

• The Red Tag Event provides special pricing and Customer Cash from $0 up to $7,250 to customers purchasing an eligible new 2008 or 2009MY vehicle, while supplies last. (Excludes Cadillac CTS-V series, Chevrolet Corvette ZR-1 and Medium-Duty trucks) See examples below.

• Dealers are instructed to write a price on the Red Tag, and to make it the price the customer will pay. This makes it simple for consumers to find great year-end deals on an outstanding GM vehicle. Dealers have been asked to be sure that the price on the Red Tag includes all applicable incentives and other fees, and excludes only tax, title and registration fees.

• While GM will create special pricing on each eligible vehicle, dealers will also use factory-to-dealer incentives and their own price reductions to create even lower prices on many vehicles in inventory for the Red Tag Event. Dealers will place Red Tags on the specially-priced units.

• All GM divisions are participating in the Red Tag Event. The limited-time offer runs Tuesday, November 4, 2008 through Monday, January 5, 2009.

• 2008 and 2009 Chevrolet, Buick, Pontiac, Cadillac, HUMMER and GMC Truck models also include a 100,000 mile/5-year Powertrain limited warranty, which is fully transferable and has no deductible. When you add in roadside assistance and courtesy transportation, it's the best coverage in America. This also is a great opportunity for customers to discover the outstanding value, exclusive features and fuel economy of some of our most popular cars and trucks.

Note: Customers should visit their neighborhood GM dealer for complete details and offer restrictions. For more information about GM's current offers, visit:

http://www.gm.com/vehicles/currentoffers/

Red Tag Event Examples (tax, title and license fees are extra):

2008 GMC Yukon Denali AWD $56,315 MSRP

Red Tag Price $51,830

Cash Back Offers -$5,000

Red Tag Price after cash back $46,830 or less

($9,485 value compared to MSRP)

2008 Chevy Silverado 1500 4WD $29,480 MSRP

Red Tag Price $27,397

Cash Back Offers -$5,500

Red Tag Price after cash back $21,897 or less

($7,583 value compared to MSRP)

2008 Buick Lucerne $31,880 MSRP

Red Tag Price $30,446

Cash Back Offers -$3,750

Red Tag Price after cash back $26,696 or less

($5,184 value compared to MSRP)

2009 Saturn Vue XE $23,745 MSRP

Red Tag Price $22,675

Cash Back Offers -$1,000

Red Tag Price after cash back $21,675 or less

($2,070 value compared to MSRP)

Link: http://www.autonews.com/article/20081103/A.../811030260/1078

[daves87rs]

It will be interesting to see if it helps....

[smk4565]

Maybe they should build a better car, rather than having to give 15% off year round to get sales. I don't think this sale will help much, except on Malibus, CTS, Lambdas which are kind of new and competitive, and maybe on Cobalts just because they will be dirt cheap. Some of GM's product is so dated and undesirable, people don't want it at any price, and the fear of the company going bankrupt probably makes people second guess buying a GM car.

I think this will help with volume, maybe make November a 30% loss rather than a 45% decline, but I don't think it will make them any more profit, which is what they need.

Edited November 4, 2008 by smk4565

[FUTURE_OF_GM]

Maybe they should build a better car, rather than having to give 15% off year round to get sales. I don't think this sale will help much, except on Malibus, CTS, Lambdas which are kind of new and competitive, and maybe on Cobalts just because they will be dirt cheap. Some of GM's product is so dated and undesirable, people don't want it at any price, and the fear of the company going bankrupt probably makes people second guess buying a GM car.

I think this will help with volume, maybe make November a 30% loss rather than a 45% decline, but I don't think it will make them any more profit, which is what they need.

In this market, product isn't the problem.

[smk4565]

In this market, product isn't the problem.

Then why was GM down more than anyone else? If the Malibu were great, they would have sold more than 10,000 of them. If the CTS were really great, they would have sold more than 4,000. The 3-series sold 9,000 (almost as many as the Malibu!). Good products still sell. GMAC not having financing hurts too; I bet a lot of people that got turned down at the GM dealership were able to get a car loan at the Toyota dealership.

[daves87rs]

In this market, product isn't the problem.

Agreed. You have to be able to afford a car first....

[daves87rs]

Then why was GM down more than anyone else? If the Malibu were great, they would have sold more than 10,000 of them. If the CTS were really great, they would have sold more than 4,000. The 3-series sold 9,000 (almost as many as the Malibu!). Good products still sell. GMAC not having financing hurts too; I bet a lot of people that got turned down at the GM dealership were able to get a car loan at the Toyota dealership.

Actually, around here more people get turned down at a toyota dealership than GM...it just depends on the area...

[haypops]

Then why was GM down more than anyone else? .

Because of the same reason they were down less than any one else the month before.

[toesuf94]

BMW has amazing leases to move the 3-series...deals that are NOT being matched at Cadillac.

[regfootball]

In this market, product isn't the problem.

it was easy for the imports to gain share when people can draw 40k off their HELOC's....

now that people need to regin in their spending, and its not like they won't need cars,

cars that provide value for the price will be the ones that sell in volume.

People used to think spending 5k more for the camry because of 'better resale' thought it was worth it back then. But now, residuals on anything will be crap, and banks are not giving out crazy money.

So when people buy new cars, they will want the most for their money. This is why GM needs to cut prices across the board. Their MSRP's are way too high, as is everyone. Instead of waiting to sell their stuff on redtag sales, they need to get the price to the actual value quicker and move the metal that way.

We're going to see a while new paradigm here. I think average transaction prices will drop and only cars that provide a lot of features and value for the money will be the only ones that sell in volume.

I think a lot of luxury marques will be in trouble too.

Ford, GM, etc in my mind can benefit more from this adjustment in people's spending than anyone. People will be less 'picky' and will look harder at price and warranty and stuff.

[gm4life]

SMK what in the hell are you smoking... Products GM has class leading GMT-900's now with six speed automatics, a great new Malibu, Enclave, Traverse, have helped GM indeed. Products like Cobalt/G5 and Torrent/Equinox even with there age are still pretty good. Honestly GM actually has some good four cylinder motors and a six speed automatics in G6 and Malibu that is a great start.

Edited November 4, 2008 by gm4life

[haypops]

Ford, GM, etc in my mind can benefit more from this adjustment in people's spending than anyone. People will be less 'picky' and will look harder at price and warranty and stuff.

I think so too. Also note that the Yen is rising in value sharply making cars imported from Japan much more expensive going forward.

[regfootball]

i am checking out GM's 'red tag sale' prices. plus 'cash back'.

still isn't enough. do you want to move metal GM?

[CARBIZ]

Maybe they should build a better car, rather than having to give 15% off year round to get sales. I don't think this sale will help much, except on Malibus, CTS, Lambdas which are kind of new and competitive, and maybe on Cobalts just because they will be dirt cheap. Some of GM's product is so dated and undesirable, people don't want it at any price, and the fear of the company going bankrupt probably makes people second guess buying a GM car.

I think this will help with volume, maybe make November a 30% loss rather than a 45% decline, but I don't think it will make them any more profit, which is what they need.

GM does build better cars/trucks, but it will take time to convince the jaded public and with the U.S. recession looking like the worst in 25 years, GM may not have that time.

I just spent the day yesterday with the Toyota Highlander and the Traverse. Seriously, there is no competition. The Highlander is a POS to the Nth degree, but it will still sell like hotcakes. Everything on the HIghlander was plasticky, cheap (we even managed to break the center storage unit for the middle row), the 3rd row was a joke, we couldn't even get a plastic cooler in the back behind the 3rd row. The Traverse is bigger, has more standard horsepower, gets the same fuel mileage as the smaller Highlander and has a host of features (like a split 3rd row) that the Highlander doesn't have - because Toyota doesn't have to bother. People will buy the Highlander in droves.

GM has been doing all the right things for at least 5 years now, but the public doesn't care. Every time GM tries to get the dealers off the incentive drug, sales go in the toilet. I can see that was a mistake, getting customers addicted to the deal, rather than the vehicle, but I guess since '01 GM has been hoping things would turn around with the new product coming online and the sales would self-perpetuate. Unfortunately, that has turned out to be naive.

[regfootball]

MSRP's need to DROP. there was a loaded traverse i saw at a chevy dealer, north of 40k, i think it was nearing the mid 40's in price. FAMILIES DO NOT HAVE 40K to blow on any vehicle, much less a damaged brand like chevy.

in this economy, GM needs to quite effing with the incentive game. get the price down to sale point right away. saab is your best example. look at how their sales went way up the moment the pricing was adjusted to what the consumer would actually pay.

right now what matters is share and volume, keeping prices artifically higher than what the market will bear can only mean inflated inventories. Builds / option combos of vehicles need to be adjusted to what people will pay and such so profit can be maintained as well.

By that I mean vehicles like the traverse need to have as many on lots at lower price points as possible.

Edited November 5, 2008 by regfootball

[smk4565]

SMK what in the hell are you smoking... Products GM has class leading GMT-900's now with six speed automatics, a great new Malibu, Enclave, Traverse, have helped GM indeed. Products like Cobalt/G5 and Torrent/Equinox even with there age are still pretty good. Honestly GM actually has some good four cylinder motors and a six speed automatics in G6 and Malibu that is a great start.

Not good enough, and the Tundra and Sequoia already have 6-speed automatics, the 09 Silverado still has a 4-speed. The Malibu sold 10,000 units in October, the Enclave 2,200 (down 47%). Toyota and Ford have all new 4-cylinders for 2009, and they have 6-speeds also (Toyota 4-cyl/6-speed only on Venza), GM has no advantage here.

GM has played the offer a cheap plastic interior with pushrod/4-speed combo and sell it at a lower price than Honda or Toyota for years and it has led them to disaster. They need to do better than the 08 Malibu and CTS on 100% of their product lineup and start selling stuff at MSRP, and not having to rely on margin eroding employee pricing.

[smk4565]

MSRP's need to DROP. there was a loaded traverse i saw at a chevy dealer, north of 40k, i think it was nearing the mid 40's in price. FAMILIES DO NOT HAVE 40K to blow on any vehicle, much less a damaged brand like chevy.

Then families need to not buy the loaded LTZ awd model, or get a used car, or not buy an SUV. Also, GM better find a way to make money on cars and not SUVs. They are addicted to SUVs because they can jack the price up on them, now that the SUV bubble burst, and cars sell, GM is screwed. Why aren't they selling 30,000 Malibus a month to families? Why doesn't GM have a minivan to sell to families?

[The O.C.]

BMW has amazing leases to move the 3-series...deals that are NOT being matched at Cadillac.

.....correction......CAN'T be matched at Cadillac.

All the rebates and supplier pricing in the world don't mean squat if we can't get them financed.....and nowadays, even a 700-score isn't enough to guarantee you a loan......

[regfootball]

Then families need to not buy the loaded LTZ awd model, or get a used car, or not buy an SUV. Also, GM better find a way to make money on cars and not SUVs. They are addicted to SUVs because they can jack the price up on them, now that the SUV bubble burst, and cars sell, GM is screwed. Why aren't they selling 30,000 Malibus a month to families? Why doesn't GM have a minivan to sell to families?

um, no, its more like the traverse is their minivan, but they want 10-15 grand more for it than a dodge caravan. If that price was in line with what the family market expects, then they would sell like the minivans used to.

Edited November 5, 2008 by regfootball

[smk4565]

.....correction......CAN'T be matched at Cadillac.

All the rebates and supplier pricing in the world don't mean squat if we can't get them financed.....and nowadays, even a 700-score isn't enough to guarantee you a loan......

Cadillac also can't match those leases because Cadillacs depreciate much faster than BMWs. Am 06 year old 3-series could still fetch $27-30,000 while an 06 CTS is worth under $20k.

[cletus8269]

Not good enough, and the Tundra and Sequoia already have 6-speed automatics

and uh, how many of those did toyo off on people the past few months?