Aug. 2 (Bloomberg) -- General Motors Corp., the world's largest automaker, will extend a program that gives employee discounts on cars and trucks to all customers, people familiar with the company's plans said. The move is a reversal of GM's intention to let the plan expire.

The offers will be in effect on 2005 models through the Sept. 5 Labor Day holiday, the people said. GM's offers, which began in June and were extended through July, expired yesterday. GM yesterday said it was cutting prices on its 2006 models as part of a long-term strategy to increase sales and lessen reliance on incentive programs.

The reversal comes after competitors Ford Motor Co. and DaimlerChrysler AG's Chrysler unit extended their own employee- pricing promotions. Those automakers began their programs in July. Ford yesterday announced its extension, which lasts until Sept. 6. Chrysler decided to extend without an expiration date, people familiar with the company's plans said yesterday.

``I'm not sure what the benefit is,'' Argus Research analyst Kevin Tynan said in an interview. ``I think the dealers were happy to see the inventory sold down but they were happy to have it over with. Is it necessary?''

GM spokeswoman Deborah Silverman declined to comment on the automaker's plans. The company, based in Detroit, recorded a 47 percent increase in U.S. sales in June because of its promotion, in which customers receive the same discounted prices that employees get.

Changing Minds

The automaker changed its mind after Chrysler and Ford decided to extend, the people said. The official announcement is scheduled for later today when GM announces July sales results, the people said.

Ford Group Vice President Steve Lyons said in an interview yesterday that Ford will report a sales rise of about 35 percent for July because of its employee-pricing plan. Ford, of Dearborn, Michigan, yesterday said it also was cutting prices on 2006 models.

GM dealers were informed this morning of the decision in an e-mail, said Troy Ontko, president of Manchester, Michigan-based Autodollars.com, a Web site that tracks rebates for dealers and consumers. The rebates are for all 2005 models except the Chevrolet Corvette sports car, Hummer H1 sport-utility model and Pontiac GTO coupe, he said.

GM shares rose 4 cents to $36.86 yesterday in New York Stock Exchange composite trading. The stock is down 8 percent this year.

 

Great info.
Thanks!

It does make the industry interesting...

I bet PolarBear and Jeff are tearing thier hair out!!!

 

It does make the industry interesting...

It smacks of desparation to me... no spine at the helm... even though I'll benefit by it, I don't like it.

I bet PolarBear and Jeff are tearing thier hair out!!!

Yeah, poor guys must be suffering from whiplash! They deserve better - IMO, they're the best thing to happen to the American-car-buying experience I've ever seen!! I mean it!!

 

I need a vacation.

 

Hey, it's a price war! Now if we could get one of those going at the gas stations....

I fear the American car companies are on the ropes, particularly GM. It's a desperation move that we're seeing.

 

I don't know if the Big whatever are *that* desperate yet.

While I was listening to one of the AM talk shows, the KBB surverys says that many models are MORE expensive than they were before the employee discount came into play.

Seems that some are forgetting to haggle just because of some catchy phrases....

Desperate moves? Yeah. Desperate results? Maybe not....

 

No, it's not desperate- it's calculated. The '06 SD's are an excellent case in point. Take a model that typically generates a dealer a couple grand over invoice profit, take away the rebates, cap the dealer to a margin that's slightly less than holdback, and send the thing out the door for slightly more money than it would have brought, with a profit, back when rebates were three grand. By my math, somebody just pocketed the difference- it isn't the dealer, it isn't the consumer, so.... Wanna haggle? Call Ford- maybe they'll offer to give some of that profit back.

 

THANK GOD YOU SAID IT!!!!!

I've made the comment a few times that the dealers are the only ones hurting from this........................People just don't realize the MANUFACTURER was selling these vehicles to the dealers at close to these prices anyway, not too much difference in the profit margin as far as the manufacturer is concerned.


The dealer's hands are tied as far as profit on the sale.......that is why people are getting raped on trade ins.

 

I have noticed myself that the deals they are advertising in the papers here aren't much (if any) better than they were before all this employee stuff started. I think its mostly a marketing strategy, aka, hype. But I guess the public is buying it....so to speak.

 

The public is definitley buying it! I keep hearing in the media that this is the most popular car promotion in 50 years. I know w/ 2 Ford plants around here all the regular citizens are itching to cash in on Ford's A plan. (there's a local joke about calling all the Ford employees A planners with a sterotype of them thinking they should get discounts on everything ). I wonder if its like psychological vengence for all the people who felt cheated every time they bought a car who didn't work at Ford!

Can any employees tell us if the dealers are really getting hurt? I know the big thing with "invoice pricing" was the dealers still got bonuses or kickbacks from Ford which let them supposedly sell the cars at cost. I'm curious as to how this employee pricing is set up. The car companies are too big and too smart to be just giving stuff away and not profiting from it.

 

Basically the employee pricing draws customers in. The money is probably made with lower trade in values and higher interest.

 

Exactly.

When I hear that revenues per unit are down by a ignificant amount for the big 3, I will believe they were actually giving better deals than before. Haven't heard anything like that yet.

Hell, the local Dodge dealer was giving around $10k off of full size trucks back in the spring. There aren't really any deals better than that from what I see around here.

LOL!! The public should be pretty pissed when they figure out they didn't save much...other than having to spend time arguing over the price, perhaps.

 

I'd also agree that I don't see a big difference in price before vs after the 'Employee Discount' pricing - hats off to GMs marketing group, they certainly earned their salary, for this qtr anyways. If I were to buy, I'd wait until this 'rush' is over. My quess is they're robbing Q4'05 or Q1'06 - I don't see their competition 'loosing' equivalent sales - so, what happens when the 'boom' goes bust? Thats when you'll want to be haggling; I expect the showrooms to be pretty empty come Dec, Jan, Feb. I'll wait, thank you. . .

 

As far as GM's concerned, that's a safe bet. Dealerships that normally have 10-20 rows of cars are down to 10 or 20 cars in stock- total. Keep in mind that most of what's left was the undesireable stuff that you couldn't sell on a good day in the first place.

That being said, GM's got a completely different gameplan than Ford right now. They needed to generate some cashflow...fast. The goal was to outrun the bondholders until they can get a bunch of new product lines into the showrooms. My personal guess is, if your in the market for a big SUV, there'll be plenty of dickering going on. Others who waited to downsize might wind up paying substantially more than they could have in the last 30 days.