GM may raise vehicle prices rather than sell to fleets, offer incentives
Recently, Toyota adjusted its sales projections for 2008 downward, and although GM is not following suit, it is hedging its bets by moving some non-product related expenses, i.e. stuff that cost money but doesn't have much to do with cars, to the end of the year. Another possibility currently being considered at GM is raising the price of some of its vehicles. These price increases would cover the rising cost of the commodities required to actually build the vehicles, but we presume it would also also make these vehicles a tougher sell in an ultra-competitive market. What GM is definitely not going to do, according to CFO Ray Young, is sell more to fleets or offer massive incentives as a quick fix to raise total sales numbers in the near term, something Old GM would've done already at this point.[Source: Automotive News, sub. req'd]
Reader Comments (Page 1 of 1)
iQuack 2:17PM (3/21/2008)
Makes no sense to build cars that aren't profitable unless creating excess inventory was done to employ workers that couldn't be eliminated under old UAW contracts.
Maybe the latest contracts with the UAW are less ruinous to GM which can keep production in line with demand for its vehicles.
Giving the company away to union workers would eventually bankrupt GM.
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DKB_SATX 3:41PM (3/21/2008)
It would still be less expensive to pay workers to twiddle their thumbs than to have them build cars that will only bloat inventories, consuming materials and impacting prices and inventory-carrying costs. Ideally you'd be able to work something out with the union on these fronts in contract negotiations, but it's been slow going to get union leadership to realize that the automotive world has changed. I guess that shouldn't be surprising since it took the automakers themselves about 10 years too long to realize the market was beginning to pass them by...
whofan 6:21PM (3/21/2008)
The more cars they sell the more parts they produce to maintain those cars. Selling parts is also a big business
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