GM to cut prices to lure customers

[DBeaSSt]

http://www.ft.com/cms/s/0/7c531d92-1270-11...00779fd2ac.html

GM to cut prices to lure back US buyers

By Bernard Simon in Toronto and John Reed in London

Published: March 16 2009 22:02 | Last updated: March 16 2009 22:02

General Motors is preparing a fresh barrage of discounts and other promotions to coax Americans into buying more cars after an upcoming US government decision on further financial aid to the Detroit motor industry.

The incentives will be designed to counter a slump in sales and GM’s market share, amid signs on both sides of the Atlantic that its financial woes are beginning to drive away customers.

GM and Chrysler have so far received $17.4bn in emergency loans from the government and are seeking billions more. However, they need to prove their viability to a government task force.

Steven Rattner, a former private equity investor who is a key member of the task force, told the Detroit Free Press yesterday that the group was committed to meeting the March 31 deadline.

He added, however: “It’s more than likely that what you will see is not a single announcement...but rather a series of actions over perhaps a reasonably long period of time.”

While stressing that GM does not know what the group will recommend, a spokesman said on Monday that “the kind of positive news coming out of that is something we can build on”.

He added that “the biggest concern for us is the fundamental softness in the market. The level of sales is unsustainable.”

GM’s share of US light vehicle sales sank to 18.3 per cent last month from 19.5 per cent in January and an average of 22.6 per cent in the final two months of 2008. The company’s viability plan is based on a 20 per cent share.

In Europe, where GM is seeking a €3.3bn ($4.3bn) bail-out from governments led by Germany, the company’s market share was 8.6 per cent in January and February, down from 9.4 per cent a year ago.

Jessica Caldwell, an analyst at Edmunds.com, an online car-pricing service, said that uncertainty about GM’s future was “definitely part of the reason” for its falling sales in the US.

According to surveys by Oregon-based CNW Marketing Research, prospective buyers’ interest in GM and Chrysler vehicles is well below their recent market shares. The gap is especially wide for Saturn, Saab and Hummer, three GM brands threatened with extinction. In Europe, sales of Saab, which filed for bankruptcy last month, are down 55 per cent year on year.

[FUTURE_OF_GM]

The key point to let the media know it's succeeding:

According to surveys by Oregon-based CNW Marketing Research, prospective buyers’ interest in GM and Chrysler vehicles is well below their recent market shares.

It's a self fulfilling prophecy.

[SoCalCTS]

The CTS is paid off and I am ready to buy. Where is the product? I've waited another 5 years for decent product and all they still have to offer me is another CTS or a G8. Honestly, the G8 would be a stretch because I cant picture myself in a car with big hood vents.

Blame the unions, blame the retirees, blame the import buyers, blame the slow economy.

I blame the inept management at GM. Where is the revitalized Buick? Why is everything future product?

GM better have some great offers and financing or I am definitely looking elsewhere because the product just is not there.

[Robert Hall]

Hmm...hasn't GM been down this road several times before?

[regfootball]

what's wrong with price cuts? THe MSRP's are clearly too high at GM compared to the competition and what the metal will move for. Volume is important to regain share and get people to buy and into cars.

Listen if the market was for high transaction prices right now, i would be skeptical about this but the next couple years price will be king and seriously Hyundai and Kia are making an effort for an all out price war to take over because they can. Soft sales of new and record used car sales (because they are cheaper) will mean new prices have to come down to move any metal and get the factories and dealerships going again.

GM needs to cut pricing across the board long term. The car will only move at the price the consumer will pay. And LEASING NEEDS TO COME BACK. cutting prices will help with more realistic residuals.

One thing the geniuses need to get. Leasing was like 30-40% of the car business. When that went away, how much do you suppose business dropped immediately? You want to sell vehicles, you must get leasing back on the table.

[regfootball]

by the way, don't discount the notion that this could simply be a marketing tactic and that the discounts won't be any better than any other time in recent history.

[cletus8269]

i have 3 payments left on my colorado. i cruised the local dealership the other night. i am not necessarily looking to buy cause there is a house coming up soon, but i couldnt help but leave a little disheartened that the only trucks that i liked there were the ones that were all $35K and up. i was only looking at the ext cabs with the LT1 packages not the LTZ or LT2's

[Drew Dowdell]

The CTS is paid off and I am ready to buy. Where is the product? I've waited another 5 years for decent product and all they still have to offer me is another CTS or a G8. Honestly, the G8 would be a stretch because I cant picture myself in a car with big hood vents.

Blame the unions, blame the retirees, blame the import buyers, blame the slow economy.

I blame the inept management at GM. Where is the revitalized Buick? Why is everything future product?

GM better have some great offers and financing or I am definitely looking elsewhere because the product just is not there.

What's wrong with another CTS?

[SoCalCTS]

What's wrong with another CTS?

Nothing is wrong with it. I just want some choices. GM has 7 brands and the only car that appeals to me is another CTS. I was hoping for a new Saab 9-3, Saab 9-5, Buick Invicta or the long promised small Cadillac. Its just disappointing. I'll have to go test drive it.

For 35% down I can get 0% financing.

[Oracle of Delphi]

Nothing is wrong with it. I just want some choices. GM has 7 brands and the only car that appeals to me is another CTS. I was hoping for a new Saab 9-3, Saab 9-5, Buick Invicta or the long promised small Cadillac. Its just disappointing. I'll have to go test drive it.

For 35% down I can get 0% financing.

You're like the 5th person today to tell me they wanted to buy a Saab. However the others won't now because GM is about to cut them loose, and they don't want to take the risk with another owner.

[SAmadei]

Its about time. GM needs to beat others with quality AND a bargain.

Sucks though that they are not telling us by how much and when. I'm still waiting for the tipping point to get a G8 GXP.

[daves87rs]

The biggest question is- Will this work?

At a time when people will be defaulting on auto loans in record highs?

I'm thinking price is not even half the issue right now.....

[Brougham-Holiday]

Its better to cut the price then to sell the car at the same price by adding thousand in incentives. A neighbor of mine recently went to check out a new Impala (to replace is Grand Prix) but was shocked to see the base models near $24,000. For such an old design, that is a lot of money for the base model. Knock a few grand off or add more standard equipment like what Chrysler did in the late 80's with the Omni and Aries.

[GXT]

what's wrong with price cuts? THe MSRP's are clearly too high at GM compared to the competition and what the metal will move for. Volume is important to regain share and get people to buy and into cars.

Whats wrong with it is that GM is trying to pretend they can be profitable.

GM can't expect to gain share. That ship has sailed. They can't be everything to everyone. They need to find a way to be profitable at the 10-12% share that they can expect long term.

[Lamar]

Whats wrong with it is that GM is trying to pretend they can be profitable.

GM can't expect to gain share. That ship has sailed. They can't be everything to everyone. They need to find a way to be profitable at the 10-12% share that they can expect long term.

GM could still be everything to everyone. It's just that for the longest time they've been really bad at it.

[Daryl Z71]

Its better to cut the price then to sell the car at the same price by adding thousand in incentives. A neighbor of mine recently went to check out a new Impala (to replace is Grand Prix) but was shocked to see the base models near $24,000. For such an old design, that is a lot of money for the base model. Knock a few grand off or add more standard equipment like what Chrysler did in the late 80's with the Omni and Aries.

I agree with the price thing. New cars have always been to expensive in my opinion so most of the time I never bothered with them. When I went to look for a new truck last November the prices were way to high for me. I mean when I bought my 05 with 17,000 miles on it it was a fully loaded truck that looked almost brand new for $23,000. The 09's I was looking at that had the same amount of equipment if not more were anywhere from $33,000 to $39,000. I mean wow that just drove me away. Then in January I went to look again and got my 09 Silverado. It was a $37,000 truck and I got it for a little over $30,000. I mean 30 is steep enough, but 37 theres no way! If I would of had to pay 37 it would still be sitting on the lot. That just shows they are too high. Alot of people tell me theyd like to have a new vehicle, but the price is what kills them

[Bimmer325]

You're like the 5th person today to tell me they wanted to buy a Saab. However the others won't now because GM is about to cut them loose, and they don't want to take the risk with another owner.

CTS aside, the only GM brand I'd actually be interested in buying a car from is Saab.

[Oracle of Delphi]

GM needs to do two things, cut the price of their vehicles across the board, and offer a bumper to bumper warranty of 10 years/100000 miles and get rid of the 3 years/36,000 miles.

[hyperv6]

Well the cut prices and rebates on the 09 model are not much of a bargin vs what I paid for my 08. they rasied the price on my model to nearly $2K over what my sticker was on my 08.

With present rebates etc I still came out as cheap or cheaper than most buying the same thing in a 09 today.

They are only getting Bluetooth, usb port, new dome light and a perefromance passenger seat less a 6 disc changer no longer available for the $2K more.

I already added the performance passenger seat for $150 and will add the dome light next for a lot less.

A 10 year 100,000 mile would be nice but GM should have no excuse for less than 5 year 50,000 bumper to bumper to add to the present drivetrain warranty.

[G. David Felt]

Personally I would be ready to buy a couple vehicles, but then they screwed up and killed the baby Duramax. I want a Suburban with the Duramax in it. The other vehicle I just might bit if the discount is good enough. GMC 1 ton Dually with Duramax in a 4x4 setup. This is my new play toy. Throw a kit camper on back and out camping I go.

[2QuickZ's]

Well the cut prices and rebates on the 09 model are not much of a bargin vs what I paid for my 08. they rasied the price on my model to nearly $2K over what my sticker was on my 08.

With present rebates etc I still came out as cheap or cheaper than most buying the same thing in a 09 today.

They are only getting Bluetooth, usb port, new dome light and a perefromance passenger seat less a 6 disc changer no longer available for the $2K more.

I already added the performance passenger seat for $150 and will add the dome light next for a lot less.

A 10 year 100,000 mile would be nice but GM should have no excuse for less than 5 year 50,000 bumper to bumper to add to the present drivetrain warranty.

The sticker price of our '08 VUE went up by something like $2400 for a '09 model with the same options. Of course, now that GM has announced it's killing Saturn, both our VUE and our Aura will be worthless in a couple of years.