GM Executive Regrets Employee Pricing

[Guest Josh]

GM EXEC REGRETS EMPLOYEE PRICING INCENTIVE, WILL NOT REPEAT IN 06 Source: wsj.com Article quotes: General Motors Corp.'s top North American sales and marketing executive, Mark LaNeve, said he now regrets launching the employee-discount program that drove GM sales to record levels last summer, and doesn't plan to repeat such promotions this year. Instead, Mr. LaNeve said in a recent interview that GM will roll back prices, and try to emphasize the advantages of its new models. Mr. LaNeve declined to say how much GM would lower prices compared to Ford Motor Co., Toyota Motor Corp. and other car makers, but he said the sticker prices would be "aggressive." The first indicator of how low GM tends to go will be in the pricing for the new Chevrolet Tahoe, which will be announced next week during the Detroit auto show. "In some ways we are turning back the clock," said Mr. LaNeve, vice president for GM North American vehicle sales and marketing, in an interview just before GM's year-end holiday break. "The Japanese made their mark by making good products at a lower price. So to some extent, we are going to underprice them." Mr. LaNeve said the employee-discount promotion, which GM began last June, was very efficient in moving vehicles. Ford and DaimlerChrysler AG's Chrysler Group soon followed with their own programs in July. But after the program ended three months later, sales dipped and hit a low in October, when sales fell by 26%. The payback from the summer sales bonanza was compounded by high gasoline prices because of Hurricane Katrina, which drove down sales of sport-utility vehicles. The employee-discount program also caused the Detroit auto maker to focus its advertising messages on the sales promotion, instead of highlighting product attributes and its effort to reduce base prices on certain models. "Hindsight being 20/20, I probably wouldn't have done it," Mr. LaNeve said. GM intends to kick off an aggressive product message in 2006 to talk about quality and value. GM plans what Mr. LaNeve describes as a "straightforward message on competitiveness, price advantages." In some cases, that will mean calling out specific competitors, like Toyota and Ford, sometimes on a model-by-model basis. This year is critical for GM, which is launching 19 new products, including five full-size SUVs, two full-size pickup trucks and a handful of new smaller SUVs, known as crossovers. "Our comeback has to be fueled by great products," Mr. LaNeve said. "There has been no comeback in our industry that hasn't been fueled by great products." Aside from trying to stop its market-share slide, which was at 26% for 2005, Mr. LaNeve is looking at addressing the perceptual gloom surrounding the company. There are rumors that GM will file for bankruptcy-court protection. Analysts say GM produces cars that nobody wants to buy. And some consumers who left GM in the 1980s still refuse to return. "We've got to get our mojo back in terms of the way we are viewed," he said. "But I don't know what the answer is. How do we get America rooting for us?"

[PurdueGuy]

They had to know that sales were going to drop like a rock after the promo ended. Still, it helped clear the old out so they can get the new stuff on the lots.

[sciguy_0504]

It's a good year-end (or possibly model-end) program, a nice way to get the old out so the new can be brought in. I don't think it should have been extended past the original cut-off dates, however.

[razoredge]

Well yea ! so many have been saying this for years. Volumn can = profit. That employee priceing, rebates and most everything else GM campaigned sent such a bad signal and the promotion was swiss cheese. I just hope they didnt shoot themselves in the foot so many times that it wont stop bleeding.

[usa1]

This really pisses me off. It just confirms that the UAW is not the biggest problem in GM, it's the idiotic managment. Gee, I've read for YEARS people talking about the harm "the deal" has been doing to GM brands for years now. Now LaNeve regets it. How laughable. "Our comeback has to be fueled by great products," Mr. LaNeve said. "There has been no comeback in our industry that hasn't been fueled by great products." Hello?! Did you just realize this? Who hasn't been saying this for years? When was this NOT the case in the automotive industry? "We've got to get our mojo back in terms of the way we are viewed," he said. "But I don't know what the answer is. How do we get America rooting for us?" Here's how. Make best in class vehicles, back them with great warrenties and offer them for a good price. GM strikes out in all three of these areas on most of their product line. GM's products over the last 30 years have been severally comprised in every way. Stop defending/using OHV engines, stop reusing 20 year od car platforms, stop shipping mid and high end cars and trucks with 4 speed autos, stop making ABS, side and curtain airbags, and stability control optional, etc, etc. If GM continues to comprise its products because it cannot afford world class ones due to legacy costs or some other thing they cannot or will not fix then they should give up now. Otherwise, we will see another 30 years of gradual decline in GM. I've been rooting for GM for 20+ years now and they continue to disappoint me at just about every turn. I'm getting sick of it. I still view Roger Smith as the biggest single factor for GM's current sad state of affairs, but this new management team isn't rating much better. Mark

[mjd1001]

This year is critical for GM, which is launching 19 new products, including five full-size SUVs, two full-size pickup trucks and a handful of new smaller SUVs, known as crossovers.

[post="68196"]<{POST_SNAPBACK}>[/post]

The above line struck me, refering to this year being 'critical' for GM....it's the same thing we heard in 2004...and 2003...and 2002...... Edited January 6, 2006 by mjd1001

[turbo200]

same line and story from last year, only this time the pricing will be "aggressive". Excuse me If I'm not overly optomistic this will actually happen and pricing will actually be in line with the competition, and in many cases below, since cars like the Grand Prix, well they don't exactly measure up to be blunt. Actions speak louder than words...

[Newbiewar]

same line and story from last year, only this time the pricing will be "aggressive". Excuse me If I'm not overly optomistic this will actually happen and pricing will actually be in line with the competition, and in many cases below, since cars like the Grand Prix, well they don't exactly measure up to be blunt. Actions speak louder than words...

[post="68276"]<{POST_SNAPBACK}>[/post]

i'm with the guy that says put the ls tahoe right at 30k and let it rock the nation...

[JazzyChef]

same line and story from last year, only this time the pricing will be "aggressive". Excuse me If I'm not overly optomistic this will actually happen and pricing will actually be in line with the competition, and in many cases below, since cars like the Grand Prix, well they don't exactly measure up to be blunt. Actions speak louder than words...

[post="68276"]<{POST_SNAPBACK}>[/post]

When a GM rep. called yesterday I literally gave them my thoughts on everything that they are doing. I mentioned the pricing game and I made sure that I wanted the info to go to the correct people. Hopefully GM will actually make it aggressive! Why not sell a Tahoe for $32,590 and a Suburban for $36,590?! Hello, can you say undercut the competition by an but load? GM will still make some profit, we've seen that profit is still there because of these incentives that drop the prices some 3 or 4 grand. Of the many things that I mentioned, I also added some notes about the new advertising campaign that GM ran during the 2006 new years eve bash in NY. Anyone else see how hot those cars were?! It made me feel all tingly inside just thinking of how much I can't wait to get my HHR and haul a** like that lol.

[regfootball]

LaNeve is lying. He has to say he wouldn't have done the promo again because it is criticized so much now. And, with a new agenda to promote 'value pricing' of course he's not going to endorse something like employee pricing that is a totally different deal than what they want to accomplish now.' GM was LOVING those employee discount sales numbers. The whole big screw up was not restocking the lots once they found sales to be much greater than expected. Lots sat 95% empty for two whole months DUH! of course you won't sell any cars if your lots are empty! JEEZ! GM missed on the sales forecasts for the first month of the EPP. they got caught with their pants down, no product to sell to chase that. simple as that. this is just them covering up their stupidity in not properly projecting sales and subsequently proving enough production soon enough to replace those sold cars. Edited January 6, 2006 by regfootball

[Jazzhead]

What's not to like about employee pricing? Haggling with the dealer over price can be a nauseating experience - I just tried to buy a used car last week from a certain Pontiac dealer in Marlton, New Jersey and was so turned off by the bait and switch that I walked away. The promotion was successful because, to the consumer, it was a breath of fresh air. But, like regfootball says, dealer lots were basically stripped of product to sell for about two months.

[razoredge]

I find much of this so interesting. Cry about poor sales in last quarter........when your inventory was gone...and your employees were ??????/sitting home ????????//collecting !!!!!!!!! Cry about 05 losses when its because of the billions you had to hand over to Fiat and the 20% or what ever it was your insurance company raised your rates in addition to what every large percentage energy and steel cost increases killed you. Then ice the cake by sending out mixed messages..yarite..feed the media..great publicity stunt what a bunch of hosers ! set the price point, promote the product, increase the warranty, educate your dealer staff, offer a nice purchase package and sell the damn cars this is not a trial run this is real

[samy1691]

It's ALWAYS....PRODUCT..PRODUCT...PRODUCT!!!!! When do these eggheads ever learn. Give us a 2-door Tahoe-Yukon and a kick ass Camaro.....sales soar!!!!!!

[enzl]

What's not to like about employee pricing?  Haggling with the dealer over price can be a nauseating experience - I just tried to buy a used car last week from a certain Pontiac dealer in Marlton, New Jersey and was so turned off by the bait and switch that I walked away. 

The promotion was successful because, to the consumer, it was a breath of fresh air.    But, like regfootball says,  dealer lots were basically stripped of product to sell for about two months.

[post="68563"]<{POST_SNAPBACK}>[/post]

Interesting theory about Employee Pricing & the drop in sales after it ended:

Perhaps the fact that the dealers had their profits sliced thin on the Employee Pricing made them LESS likely to deal when it ended...so not only was there less product to sell, there was also a need to 'catch-up' on per-unit profitability. The Best of the best dealers run margins of 1-3% as net profit. The EPP reduced the amount you could make on any given vehicle.

[GMTruckGuy74]

What's not to like about employee pricing?  Haggling with the dealer over price can be a nauseating experience - I just tried to buy a used car last week from a certain Pontiac dealer in Marlton, New Jersey and was so turned off by the bait and switch that I walked away.

That's the one I leased my Envoy from last August!!! :lol:

The promotion was successful because, to the consumer, it was a breath of fresh air.    But, like regfootball says,  dealer lots were basically stripped of product to sell for about two months.

[post="68563"]<{POST_SNAPBACK}>[/post]

That's the trouble the wife and I had; GMAC decided to include our Rendezvous in the August Pull-Ahead program. Problem with that was there were no Envoy's local enough to dealer trade for. They ended up getting the Envoy from somewhere in PA!!!

[evok]

This more LaNeve babble. If it were not for the Employee Pricing in June and July, GM would still be sitting on the full size and midsize pick ups and utilities they had in inventory. One word, Katrina! We saw what that did to truck sales.

[97regalGS]

the public is so addicted to GM Promos they should raise the prices on new vehicles and raise the incentives.

[razoredge]

Interesting theory about Employee Pricing & the drop in sales after it ended:

Perhaps the fact that the dealers had their profits sliced thin on the Employee Pricing made them LESS likely to deal when it ended...so not only was there less product to sell, there was also a need to 'catch-up' on per-unit profitability. The Best of the best dealers run margins of 1-3% as net profit. The EPP reduced the amount you could make on any given vehicle.

[post="68600"]<{POST_SNAPBACK}>[/post]

Is this true ? The discount came out of the retail not the wholesale end ?

[caddycruiser]

When a GM rep. called yesterday I literally gave them my thoughts on everything that they are doing.  I mentioned the pricing game and I made sure that I wanted the info to go to the correct people.  Hopefully GM will actually make it aggressive!  Why not sell a Tahoe for $32,590 and a Suburban for $36,590?!  Hello, can you say undercut the competition by an but load?  GM will still make some profit, we've seen that  profit is still there because of these incentives that drop the prices some 3 or 4 grand.  Of the many things that I mentioned, I also added some notes about the new advertising campaign that GM ran during the 2006 new years eve bash in NY.  Anyone else see how hot those cars were?!  It made me feel all tingly inside just thinking of how much I can't wait to get my HHR and haul a** like that lol.

[post="68524"]<{POST_SNAPBACK}>[/post]

Uh, number one, there's no reason whatsoever for a $4k difference in price between a Tahoe and Suburban. At MOST, I could see around $1k like now, but it should be even less than that.

Well, that, and $32.5k would still be too high, PERIOD. A base Expedition (that has more room and much better space usage overall than a Tahoe) starts right around there, as does an Armada at just a bit more. BUT, then you also have the Durango that TOO has a better usage of interior space, but starts in the $20k's.

They better get REALLY agressive with the Tahoe pricing as a start, aggressive enough that a GM dealer might finally be able to emulate their Honda friends across the street and give discounts in the HUNDREDS and not in the mutiple THOUSANDS like now. It'd be great if, for once in their horrible history of MSRP inflating, that they kept a continual tight lip on the invoice/MSRP line, to the point that the dealer can still make a profit and they don't even have to ever use a rebate, EVER, except for maybe at the very end of a model year, and even then at max maybe just a $1k clear out deal.

I'm sorry to harp on it again, but they just better get this one right, and do it right from day one. If they want to emulate anyone, just go look at Honda and see how it works over there for the most part (leaving aside the one or two slower sellers).

Getting a $10k+ discount never leaves that good of a taste in your mouth, at least when it comes to wondering about the quality/worth of the vehicle you just purchased.

Simply put? Tahoe at $28,995 and Suburban at $29,795. Like I said before, NO one ever walks out of a dealer paying anymore than $27-28k for a base Tahoe, and at levels like this, it'd be very easy just to "pull a Honda" and cut only 500 bucks or a little closer to $1k off, call it a day, and not have someone worrying about combining 7 of the 11 latest offers, like they're at the supermarket with a wallet of coupons...

A little overlap with the craptacular base Trailblazers for the time being? Yep, but that trucklet will always have a big rebate on the hood for the near future and should still be selling in the lower 20k's at its lower points.

Actually, the HHR is one good example of them doing it right, so just copy that idea... Edited January 7, 2006 by caddycruiser

[caddycruiser]

the public is so addicted to GM Promos they should raise the prices on new vehicles and raise the incentives.

[post="68662"]<{POST_SNAPBACK}>[/post]

I don't even want to know what you're smoking... :o

[Newbiewar]

Is this true ? The discount came out of the retail not the wholesale end ?

[post="68846"]<{POST_SNAPBACK}>[/post]

yes...

thats why there is a rebate and a red tag sale or GMS...

GMS is about $1500 below invoice... why do you think Buickman is crying like a raped ape?

Red tag was about $100 below invoice...

GM's theory basically is... why should the dealership be rolling in money if GM isnt?

the employee discount came with fixed dealer price...

sooo... on a 40k dollar tahoe, or silverado, the customer could get it for about 30k... giving the rebate of about 4k, and about 6k in discount from the dealership...

this is why GMS seemed like a good idea, because the money wasnt GM's to loose...

[evok]

"On another subject, Mr. Wagoner called last summer's discount program "the most successful consumer program we have ever run." The plan, which gave consumers the price breaks that normally go only to the company's employees, helped G.M. reduce its swollen inventories of unsold cars. Matched by Ford and Chrysler, the program led to some of the strongest monthly sales in industry history. But sales fell steeply in September and October when the employee discounts were discontinued, prompting some experts to say that it had been a short-term solution to G.M.'s long-term problem of getting buyers to pay closer to retail for its cars and trucks." Wagoner quote from the NY Times interview. Edited January 7, 2006 by evok

[caddycruiser]

"On another subject, Mr. Wagoner called last summer's discount program "the most successful consumer program we have ever run." The plan, which gave consumers the price breaks that normally go only to the company's employees, helped G.M. reduce its swollen inventories of unsold cars. Matched by Ford and Chrysler, the program led to some of the strongest monthly sales in industry history.

But sales fell steeply in September and October when the employee discounts were discontinued, prompting some experts to say that it had been a short-term solution to G.M.'s long-term problem of getting buyers to pay closer to retail for its cars and trucks."

Wagoner quote from the NY Times interview.

[post="69399"]<{POST_SNAPBACK}>[/post]

He's an idiot when it comes to this business...what more can I say? :rolleyes:

Flame me, as you wish :AH-HA_wink:

[evok]

He's an idiot when it comes to this business...what more can I say? :rolleyes:

Flame me, as you wish :AH-HA_wink:

[post="69488"]<{POST_SNAPBACK}>[/post]

I'll pass.

I give Wagoner a pass until 1-1-08. Edited January 8, 2006 by evok

[razoredge]

"On another subject, Mr. Wagoner called last summer's discount program "the most successful consumer program we have ever run." The plan, which gave consumers the price breaks that normally go only to the company's employees, helped G.M. reduce its swollen inventories of unsold cars. Matched by Ford and Chrysler, the program led to some of the strongest monthly sales in industry history.

But sales fell steeply in September and October when the employee discounts were discontinued, prompting some experts to say that it had been a short-term solution to G.M.'s long-term problem of getting buyers to pay closer to retail for its cars and trucks."

Wagoner quote from the NY Times interview.

[post="69399"]<{POST_SNAPBACK}>[/post]

Im not getting your verdict from the statement or of the statement ? We all know this happened but what does it mean or how can it be interpreted ? Is it common for sales to decline this time of year ? GM is not the only company that had "blow out sales" over the summer. Couldnt this also mean much of the new car shopping/buying was done ? New models comming in Nov ?

[evok]

Im not getting your verdict from the statement or of the statement ? We all know this happened but what does it mean or how can it be interpreted ? Is it common for sales to decline this time of year ? GM is not the only company that had "blow out sales" over the summer. Couldnt this also mean much of the new car shopping/buying was done ? New models comming in Nov ?

[post="69541"]<{POST_SNAPBACK}>[/post]

Start here and things might make sense!

http://www.cheersandgears.com/forums/index...topic=4591&st=0

[razoredge]

I already read that and I get the left hand not knowing what the right hand is doing part. I really wasnt looking for a homework assignment, I thought maybe I could get your input about sales drops in the fall after the summer months of everyones sales. I guess apparently Im only worth one kind of effort from you ? I mean Im capable of both confrontation and neutral contribution.......oh well

[evok]

I thought maybe I could get your input about sales drops in the fall after the summer months of everyones sales. I guess apparently

[post="69573"]<{POST_SNAPBACK}>[/post]

Sales pull ahead because of the sales promotion. That simple. June sales were up 40% for GM. They came from people thinking of getting vehicles in Aug, Sept, Oct etc. Instead of buying cars later they bought sooner. June and July were record months for the industry in sales.

In the Fall, Katrina and gas prices killed truck sales, and the big 2 took the brunt of it because of their market share. Edited January 8, 2006 by evok

[razoredge]

I wonder if contractors involved in the clean up/rebuild bought new trucks from profit or expanded business ? My problem is when I think trucks, I think work trucks, not much gonna keep those guys from buying new trucks when the time comes and business is good. Gasoline is in the price.

[97regalGS]

"On another subject, Mr. Wagoner called last summer's discount program "the most successful consumer program we have ever run." The plan, which gave consumers the price breaks that normally go only to the company's employees, helped G.M. reduce its swollen inventories of unsold cars. Matched by Ford and Chrysler, the program led to some of the strongest monthly sales in industry history.

But sales fell steeply in September and October when the employee discounts were discontinued, prompting some experts to say that it had been a short-term solution to G.M.'s long-term problem of getting buyers to pay closer to retail for its cars and trucks."

Wagoner quote from the NY Times interview.

[post="69399"]<{POST_SNAPBACK}>[/post]

kinda points back to your 'corporate communications' comment in the other thread. GM doesn't seem to have a clue how to talk to the media.

[CARBIZ]

GM is singing happy songs up here in the Hinterland, but only Canada's national figures look pretty. As in AMerica, GM is getting its ass kicked in the major urban markets. I can't believe that in the U.S., the Trailblazer is the #1 selling SUV. UP here, we can't give them away, yet you will see Pilots, Xterra's and Sante Fe trucks everywhere! GM's employee pricing (started a month later here and Ford beat us to the punch by a week) gave me the best month I've had since 2000 in August. I"ve also made a lot more money this year than the last two, so I'd say that over all the plan was a success. I think one of the areas where GM may be having a future problem is that some companies are tightening their belts and cutting their pay plans to their sales staff. This is having an impact on their senior selling staff, who are already being squeezed because floor traffic is down dramatically. Just like cutting its engineering/design people, GM does not want to lose its best sales people, either. Some are being tempted to go over to the dark side and go to Toyota. As long as their have been cars for sale, stupid general managers flood their show rooms with rookie sales staff when times are tough, with the mistaken belief that somehow that will drum up extra sales. All it does is piss off the senior staff and create a lot of friction, which sometimes the customers are exposed to - and that is a big no, no. At least in this area, it is the antiquated, outmoded dealers that are part of the problem. Old school thinking and old school selling.

[evok]

kinda points back to your 'corporate communications' comment in the other thread.  GM doesn't seem to have a clue how to talk to the media.

[post="69744"]<{POST_SNAPBACK}>[/post]

Exactly - I am sure hoping LaNeve was taken out of context though.

[MyerShift]

Regrets Employee Pricing? Somehow I really don't find that to be surprising. When this (the prcing plan) was announced, it shocked me. I thought that at the time it would surely seal GM's fate. Upon the most recent product introductions, and the others in the pipeline, I really feel that I may finally breathe a bit of relief.