GM to Bring Back Employee Prices
Detroit News
By Greg Bensinger
Aug. 19, 2008
General Motors Corp., whose U.S. sales fell 18 percent this year, will offer prices usually available only to employees as well as cash discounts of as much as $4,000 on most 2008 and some 2009 models, a dealer said.
The U.S. offers, planned to coincide with GM's 100th anniversary, begin Wednesday and will run to Sept. 2, said Steve Lowry, sales manager of Plaza Pontiac-Buick-GMC in Omaha, Neb., in an interview Monday. John McDonald, a spokesman for Detroit-based GM, confirmed the program without giving details.
"This has the effect of pulling demand ahead for customers who were already considering buying a GM vehicle, so there's going to be a bit of a hit in later months," said Dennis Virag, president of Automotive Consulting Group Inc. in Ann Arbor. "GM has a lot of inventory right now, though, and they are trying to bring out new 2009 models."
The largest U.S. automaker is trying to spur sales, even as it seeks to hold down incentive costs, in what may be the weakest U.S. car market since 1993. GM's sales decline through July was wider than the industry's 11 percent fall, and the firm posted a $15.5 billion second-quarter loss.
The automaker hasn't posted an annual U.S. sales gain since 1999 and may be headed for its seventh straight monthly decline in August.
Employee discounts vary by vehicle and bring the price closer to the dealer's invoice amount. A Buick Lucerne sedan, for example, is $25,872 for employees, compared with $28,040 as the usual base starting price, Lowry said. GM, in addition to the employee price, is offering a cash discount of as much as $1,750 on the Lucerne, he said.
"When GM did this three years ago, we more than doubled our sales that month," Lowry said of the so-called employee prices. "Here's hoping we can repeat that."
GM, Ford Motor Co. and Chrysler LLC have offered employee pricing for all buyers in the past to pump up U.S. sales. When the offers ended, sales plummeted.
The automaker lowered its average incentive per vehicle 3.9 percent last month from June, to $3,284, according to Autodata Corp. in Woodcliff Lake, N.J. The industrywide average fell 1.4 percent to $2,773, Autodata said.
When GM rolled out employee pricing for June 2005, its U.S. sales surged 47 percent that month and 15 percent in July before tapering off. For the past several weeks the carmaker has been letting its U.S. employees extend their discounts on a one-time basis to friends or extended family.
The company's U.S. inventory of cars and light trucks rose by 11 days to an 82-day supply on Aug. 1 from a month earlier, compared with 69 days for the industry, according to trade publication Automotive News.
