General Motors won't reinstate employee pricing. Really.
Those of you holding your breath and waiting for General Motors to reinstate employee pricing will have to hold it a little longer. Despite the automaker's plans to revive the rebates and low-financing deals present in June as incentives to move metal off dealership lots, the company is resisting the urge to follow Chrysler back into the employee pricing abyss.
GM spokespeople call incentives such as the zero percent financing on its 2006 big SUVs "tactical," while the move away from incentive spending in favor of value pricing "strategy." Dealers and analysts alike favor the company's decision to stick to its guns, even if consumers ready to buy don't.
[Source: the Detroit News]
Reader Comments (Page 1 of 1)
L3 12:09PM (7/10/2006)
Good for them. Ford won't do it either. Any way you look at it, it is just suicide. With discounts and rebates, anyone can get about the same deal anyway. Noone can build value and brand pride while cheap selling their product. My dad always reminded me, "Anyone can sell a dollar for 99 cents!"
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Mansoor 12:10PM (7/10/2006)
Its good they dont introduce those damn incentives. At least it will keep the resale values a little bit higher. This is also the first step back to profitiability.
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gbh 12:22PM (7/10/2006)
That's funny. I saw a billboard in TN yesterday that offered 'GM Supplier Pricing for Everyone'. Also offered that 'Buyer keeps all rebates and incentives'.
Nice fresh billboard. Especially since it had a "Summer 2006" date on it.
Don't worry, they can't write it all off in financing. huge giveaways will start soon. They have no choice.
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Karl 12:26PM (7/10/2006)
This is good news. Perhaps they'll put the reigns on marketing and instead invest the same capital in R&D.
I wouldn't hold my breath on that one either.
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Tool 12:31PM (7/10/2006)
GM Value Pricing is working. If they resort to an employee pricing event, I will lose what little respect I have for them.
All Employee Pricing does is move consumers forward. There were few, if any, incremental sales as a result of last summer's folly.
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Makers Mark 12:32PM (7/10/2006)
Toyota has been giving $1,000 discounts and 1.5% financing on 2005 models, the only difference is they do it through dealers advertising locally, instead of advertising nationally. All automakers use discounts to sell off old merchandise, if the maker doesn't do it the dealers will. I looked at a 2005 Camry with discounts over 3,500 but bought a Honda accord instead.
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Michael Karesh 12:35PM (7/10/2006)
There are going to be new incentives on the 19th. Maybe not EP, but something better than they have now.
I'll upload them as soon as I see them.
http://www.truedelta.com
That billboard was no doubt a dealer ad. Dealer's can give whatever pricing they want. Supplier pricing is about 4% over EP, and thus a bit more than 1% over invoice. A decent negotiator will usually pay less for most cars, GM or not.
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Michael Karesh 12:43PM (7/10/2006)
Toyota/Lexus dealers can discount more because they enjoy larger margins. This is evident when you compare them to other cars on my site. Toyotas that don't look competitive at MSRP can be very competitive at invoice.
Toyota offers rebates and incentives even on 2006s. They're on its site, just not heavily publicized. Honda is even stealthier: it uses factory-to-dealer cash rather than consumer incentives. The Europeans have the highest incentives of all, but again in the form of dealer cash and subsidized leases. I don't currently track these, but would like to in the future. Just need a good source of the data.
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gbh 12:58PM (7/10/2006)
Micheal, I realize that dealers have complete latitude in pricing, that's franchise law 101. Perhaps I wasn't clear enough abou the point I was trying to make.
The direction was to illustrate foreshadowing of "Employee Pricing Returns!". (Or whatever smoke and mirrors terms they use to pretend that they aren't doing it again...)
Doesn't matter how they move the money around (finance, sticker, rebate) reality dictates that GM will have to take some drastic measures to move some of the deeply piled up steel. So far, the numbers indicate that the current program is simply not doing what needs to be done.
So, call it what you will. GM will have to do some serious sticker slashing (however they hide it) before the end of the summer. They need to keep it churning a bit longer.
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Will Wheeler 1:34PM (7/10/2006)
Why is it that GM has so many cars and trucks on it's lots? It would seem that GM should slow production, and only produce enough cars to sell. By overproducing you are forced to resort to cut rate pricing, and eventually you cheapen the product so much that people will only pay the "employee price".
Two more observations....
Why is it the "new" GM trucks have gone back to drum brakes on the rear wheels?
Why is it the new Tahoe only has a 4 Speed auto?
These cost cutting measures are ridiculous, since when you compare this other makes, you are less likely to buy the GM car, selling a car at a lower margin is still better than not selling one at all.
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Mark 1:42PM (7/10/2006)
I'm looking for a new car. I will buy a toyota. My cousin is buying one too, and she likes toyota too. bye.
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Tool 1:46PM (7/10/2006)
"I'll upload them as soon as I see them.
http://www.truedelta.com"
Thanks for the post whoring Michael. I thought maybe you would be able to hold off on the self-promotion thing--kind of like I thought Chrysler would be able to hold off on EP--but I guess not.
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Seb 3:42PM (7/10/2006)
Michael... Tool is right. If you want to advertise on this site, visit http://www.weblogsinc.com/advertise/ and do it properly.
It's getting more and more tiring to read your "comments" on Autoblog.
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LM dealer 7:11PM (7/10/2006)
Dont any of you realize that Chrysler's EP pricing is only marketing? The bottom line pricing is actually more on most vehicles than it was before EP.
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Rambling Wreck 8:46PM (7/10/2006)
gbh,
I'm curious, is your dildo shaped like a Prius, Camry or Lexus?
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tv 4:12PM (7/11/2006)
Did no one read GM's June sales report? Yes, it showed sales down from a year ago when they offered EP but they didn't make any money then so that didn't work and I think everyone would agree was a failed strategy that resulted in a temporary rush of sales only to be more than offset by large drops in following months -- not that the mainstream media would take time to figure that out. But when June sales are put in context of this year and new launch vehicles (mostly the new Lutz designs with the improved interiors) it yields a significantly different view:
* Sales were up 15% compared to May. Best month year to date the release says.
* Their market share in N. American went UP to 27.5% in June with little or no incentives on most vehicles.
* Strongest improvement was in cars -- isn't that what it should be with higher gas prices -- led by the Pontiac G6 and Torrent-- two cars from a much maligned brand.
* All the "new launch vehicles" had best sales of the year including the new tahoe, new impala, lucerne, hhr, G6, Torrent and others. Caddilac, Saturn also posted strong sales gains.
I agree people will be people and will look for a discount -- sometimes even buying a car that has the biggest one regardless of quality or other features -- but why GM would veer off their present path back to a failed one would perplex me. 0% financing is a far cry from EP or even cash back incentives. It seems their total value pricing strategy is working so why fix it?
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jamie 6:23PM (7/11/2006)
DOES ANYONE KNOW IF GM WILL BE HAVING THE 0% FINANCING AGAIN ANYTIME SOON?
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cR 3:46PM (7/13/2006)
Regarding:
"Why is it that GM has so many cars and trucks on it's lots?"
GM's inventory position is much better than DCX's at present (which is why GM isn't jumping on the heavy discounting bandwagon as quickly as DCX).
Yes, GM is planning on slowing production. That's why they just bought out 35,000 UAW employees and are planning on closing 12 plants. The production levels are going down, and they will be going down quickly once the plants start closing. It takes some time, however. The UAW buy-out program was one of the best downsizing moves I've ever seen. Kudos to GM management (and to the UAW guys who are enjoying their retirement now).
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johnny 12:51PM (7/18/2006)
More than likely 0% will become available again on gm vehicles like the envoy and the sierra since new body styles are arriving shortly. Also I understand everyone wants a good deal on a new vehicle but I am the internet manager for a dealer and if someone is on a budget is one thing but when you have people that make well over 6 figures and beat and beat on price even if its over say 500 bucks makes me sick since there are decent good salespeople out there that have families to feed too. My best customers who I will go out of my way for and always send me customers I make them a good deal and make me a decent commision and everyone is happy but some people come in here and act like they are owed the world what is wrong with people in this world?
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