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GM Employee Discount Offered to Public

 
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BMWDude BMWDude
User | Posts: 84 | Joined: 02/05
Posted: 05/31/05
08:36 AM

"General Motors Corp., hoping to clear dealer lots of growing numbers of unsold models, is trying yet another tactic to drum up sales.

GM will announce Wednesday that it will offer all buyers the same discount that employees get, giving consumers nationwide thousands of dollars off the price of every 2005 car or truck except the Chevrolet Corvette, a person familiar with the plan said Friday. The employee discount varies by model.

The new program, to be unveiled publicly the same day that GM is expected to report another weak month of U.S. auto sales, could help trim high inventories of cars and trucks. That particularly means full-size pickups and sport utility vehicles, sales of which have suffered due to record high gasoline prices, dealers said...."

"...One reason GM may be anxious to move out the older trucks is to make room for a new generation of large pickups and SUVs, code-named GMT-900, expected to hit dealerships early next year.

GM executives have said in recent months that they hope to back away from offering large incentives on their vehicles, which analysts said has weakened the strength of some GM brands and hurt the trade-in value of GM vehicles.

Over the last two months, GM's Hot Button Event promotion gave consumers the chance to win one of 1,000 GM cars and trucks when they visited a dealership. For the many consumers who didn't win a vehicle, GM also offered a $1,000 cash bonus applied to the purchase or lease of a new 2004 or 2005 model year GM car or truck. "It's driven a lot of traffic in, but I haven't sold a lot of cars off it," Thompson said."

Original Article at Freep.com
 

frankrizzo-#002 frankrizzo-#002
User | Posts: 59 | Joined: 05/05
Posted: 05/31/05
09:01 PM

to say that Gm is "anxious" to move trucks is a very kind understatement - i think desperate is more appropriate and more accurate.
 
the other thing is this dealer Thompson - the dealers are *never* happy - the Hot Button has driven a lot of traffic but he hasnt sold any cars ? i think he needs to do more to put those customers in cars
 

SoCalDriver SoCalDriver
New User | Posts: 19 | Joined: 01/05
Posted: 06/04/05
03:27 PM

this program is being advertised on the front page of Yahoo today.

employee discounts to one and all

as if that is going to sell a car


 

CrunchyCookie CrunchyCookie
User | Posts: 153 | Joined: 01/05
Posted: 06/06/05
08:26 AM

The statistics agree with you:

2004 Net Revenues per Vehicle / Profits per Vehicle


Toyota $26,514 / $1,488


Nissan $23,707 / $1,603

 

 Honda $23,202 / $1,250  

Ford $22,553 / $620

Chrysler $24,105 / $186

 

GM $20,659 / (-$2,311)

 

 Looks like they're selling fine. It's just that the sales ain't doing them any favors.
 

 

Mazduh Mazduh
New User | Posts: 11 | Joined: 01/05
Posted: 06/07/05
04:54 PM

Don't you know anything Crunchy?  They might lose money on each one sold, but they'll make up for it in volume.  DUH.
 

Chevrolicious Chevrolicious
New User | Posts: 5 | Joined: 02/05
Posted: 06/10/05
08:57 AM

Looks like it's working.  At least, from a volume standpoint.
 

AG1972 AG1972
New User | Posts: 19 | Joined: 03/05
Posted: 06/17/05
08:04 AM

Looks like Ford and Chrysler are fighting back.

"DETROIT (AdAge.com) -- GM's "employee discount" promotion, which is pulling more potential buyers into showrooms, has also evoked strong responses from Ford Motor Co. and Chrysler Group."

"

 Ford and Chrysler have each taken quick action to directly counteract the GM marketing strategy, which appears to have caught the public's attention.  

 Rival campaigns
Both automakers kicked off new ad campaigns this week touting their own deals and disparaging GM's.  

GM's "employee discount" hype on all its 2005 models is attracting more consumers who had Ford, Chrysler or other non-GM brands on their shopping lists, according to CNW Marketing/Research. CNW found that while 57% of all people who entered a GM dealership last June were already GM "intenders," just 37% were intenders this June. That means, CNW President Art Spinella explained, that the new program is drawing increased numbers of non-GM consumers, and that the showroom traffic is less reliant on those who already own GM vehicles.  

GM’s current deal started June 1 and ends July 5. Interpublic Group of Cos.’ McCann Erickson, Birmingham, Mich., handles GM corporate, multi-vehicle brand advertising.  

Savvy consumers can probably negotiate with GM dealers for a better deal than the employee discount, said an auto consultant who asked not to be named."
 

" On Dodge.com, after clicking on “Summer Sales Drive,” the page reads: “You don’t need an employee discount to get a great deal from us.” Deals on the 2005 Dodge Durango sport utility vehicle include 0% financing for 36 months, $4,000 trade-in bonus cash or $4,000 cash, according to the site.  

Ford Division’s national TV spot, which broke earlier this week, is themed “The Truth.” The commercial plugs record sales of the new Mustang, the F-150 pickup’s record as the best-selling U.S. vehicle and the Explorer as the best-selling SUV. The spot segues into the core message: that Ford brands' rebates make them cheaper than GM’s employee discount."

 

frankrizzo-#002 frankrizzo-#002
User | Posts: 59 | Joined: 05/05
Posted: 06/20/05
01:06 PM

AG1972 wrote:
Looks like Ford and Chrysler are fighting back.

"DETROIT (AdAge.com) -- GM's "employee discount" promotion, which is pulling more potential buyers into showrooms, has also evoked strong responses from Ford Motor Co. and Chrysler Group."

"

 Ford and Chrysler have each taken quick action to directly counteract the GM marketing strategy, which appears to have caught the public's attention.  

 Rival campaigns
Both automakers kicked off new ad campaigns this week touting their own deals and disparaging GM's.  

 GM's "employee discount" hype on all its 2005 models is attracting more consumers who had Ford, Chrysler or other non-GM brands on their shopping lists, according to CNW Marketing/Research. CNW found that while 57% of all people who entered a GM dealership last June were already GM "intenders," just 37% were intenders this June. That means, CNW President Art Spinella explained, that the new program is drawing increased numbers of non-GM consumers, and that the showroom traffic is less reliant on those who already own GM vehicles.  

 GM’s current deal started June 1 and ends July 5. Interpublic Group of Cos.’ McCann Erickson, Birmingham, Mich., handles GM corporate, multi-vehicle brand advertising.  

 Savvy consumers can probably negotiate with GM dealers for a better deal than the employee discount, said an auto consultant who asked not to be named."
 

 " On Dodge.com, after clicking on “Summer Sales Drive,” the page reads: “You don’t need an employee discount to get a great deal from us.” Deals on the 2005 Dodge Durango sport utility vehicle include 0% financing for 36 months, $4,000 trade-in bonus cash or $4,000 cash, according to the site.  

 Ford Division’s national TV spot, which broke earlier this week, is themed “The Truth.” The commercial plugs record sales of the new Mustang, the F-150 pickup’s record as the best-selling U.S. vehicle and the Explorer as the best-selling SUV. The spot segues into the core message: that Ford brands' rebates make them cheaper than GM’s employee discount."

 

 I am impressed with the response to the GM employee discount deal. I think that GM's ad people finally struck a nerve that the previous hot button campaign did not. It may be that consumers didnt respond to the hot button campaign b/c it feels like every other gimmick that car manufacturers and car dealers have deployed over the last 50 years but the employee discount is something that is much more universal, much much pervasive and 100% fresh and disconnected from traditional auto retailing - I can think no less than 10x in the last couple years where people that worked at  clothing stores or coffee bars or restaurants offerred me or offerred others the oppty to take advantage of their discount.
This was a masterstroke and I give GM a lot of credit --- for onceEmotion 1
 

Shakes-#002 Shakes-#002
New User | Posts: 36 | Joined: 06/05
Posted: 06/21/05
06:55 PM

Hers the scoop..........Being that I work for a GM dealership in my home town.True enough you get the "discount" BUT what they are doing is marking the price so that they can give you the "discount" but yet they still get their moneys worth and besides I can tell you right now our discount isn't much at all really not even worth dealing with!  

RabbitRabbitIrvineRabbit RabbitRabbitIrvineRabbit
New User | Posts: 8 | Joined: 06/05
Posted: 06/22/05
08:37 AM

Now GM's just cutting the prices directly.  News.
 

sedriskill sedriskill
New User | Posts: 2 | Joined: 06/05
Posted: 06/22/05
03:26 PM

"

 Thinking of buying a Toyota? Better act fast! Toyota is most likely going to raise the prices of its new cars in the U.S. by an average of two to three percent in October. Reasons behind the move? Many jounalists are indicating that Toyota is raising its new car prices out of consideration to its struggling U.S. rivals. Huh? Now I don’t claim to know everything (or even very much) about the auto industry as a whole…but I’ve never heard that WalMart was going to raise its prices because its competition was struggling with sales.":

What do you think about that? GM lowering prices and toyota raising them to "help" GM et al. out?

 

 

frankrizzo-#002 frankrizzo-#002
User | Posts: 59 | Joined: 05/05
Posted: 06/23/05
01:50 PM

sedriskill wrote:
"

 Thinking of buying a Toyota? Better act fast! Toyota is most likely going to raise the prices of its new cars in the U.S. by an average of two to three percent in October. Reasons behind the move? Many jounalists are indicating that Toyota is raising its new car prices out of consideration to its struggling U.S. rivals. Huh? Now I don’t claim to know everything (or even very much) about the auto industry as a whole…but I’ve never heard that WalMart was going to raise its prices because its competition was struggling with sales.":

What do you think about that? GM lowering prices and toyota raising them to "help" GM et al. out?

 



I think this is an issue where TOYOTA doesnt want to be perceived as the vanquishing conqueror who comes into American and kills off our auto industry -I am sure that they are worried about potential backlash against Toyota as there is a precedent for this in other markets when jingoism has caused people to want to Buy American or Boycott France. If I were Toyota I too would be concerned about the PR disaster if Toyota were to overtake GM and at the same time throw people out of work if  a GM or Ford were to go BK. Its a realistic concern and they are very smart - I think the mistake was in tipping off people to what they were going to do
 

CrunchyCookie CrunchyCookie
User | Posts: 153 | Joined: 01/05
Posted: 07/06/05
08:44 AM

The numbers are in, and it's a smashing success.

GM Sales Explode in June
“Employee discount” offer sends sales skyrocketing.

 
General Motors Corp. enjoyed its best sales month in nearly 20 years as sales soared 41 percent in June. Consumers responded positively to the company's offer of employee discounts to all buyers.  GM sales were boosted to a blockbuster 18 million units annualized during the period.

The "employee discount for everyone" program was so successful it forced both the Chrysler Group and the Ford Motor *** both of which scored very modest sales gains in June, to revisit their incentive campaigns for July. Chrysler officials said the details of its new offers would be available this week.

"We are going to run a program beginning July 6 that has similar characteristics to the General Motors program," said Gary Dilts, Chrysler Group vice president of sales, during a conference call with analysts and reporters. "It's not a bad way to go for the '05 model year to end," Dilts added.

GM, however, was less successful in slowing down gains by Toyota and Nissan. Both Japanese automakers posted double-digit sales increases in June. Honda's sales also increased by 4.7 percent, and even struggling Mitsubishi increased sales by two percent as it registered its first month-over-month improvement in sales in nearly two years.

Analysts in fact said GM's incentives helped boost sales across the board by stimulating showroom traffic and cross-shopping of vehicles.

Nevertheless, GM still wound up with a whopping 33-percent market share in June. Even with a two-percent increase in sales in June, Ford was the big loser as deliveries of its flagship F-150 pickup truck fell by seven percent last month as truck buyers responded to GM's big discounts. For the first six months of 2005, sales of the F-150 are behind last year's pace, when the company sold 934,000 pickup trucks.

Overall pickup trucks fared better than SUVs, which are losing popularity. The new Ridgeline, for example, was critical to helping Honda post a sales increase last month.

The last time GM's sales were so strong was in September 1986, when then-GM boss Roger B. Smith ordered a sweeping incentive program to clear away a huge inventory of unsold vehicles. The 1986 program was a smashing success tactically but it also intensified the incentive battles that have waxed and waned over the years but have never been extinguished.

Paul Ballew, GM general director of market analysis, said the employee discount program cut through the clutter and in many ways was more successful than the heralded "Keep America Rolling" campaign that GM launched in the wake of 9/11. The GM sales figures also help lift the Dow Jones Industrial Average and put a big dent in GM's inventory of unsold vehicles.

Ballew said GM raised incentives by about $400 to $500 per vehicle but the rise in incentive spending was offset by the fact that more consumers signed purchase agreements rather than leases, cutting the overall cost to GM.

Analysts, however, were still skeptical about the eventual outcome of the program. "We believe this is likely the most expensive marketing program ever run by GM," Rod Lache, Deutsche Bank analyst, said in a research note. Lache estimated the employee discounts increased GM incentive spending by $900 per vehicle.

GM sales totals are also likely to fall quickly once GM withdraws the incentive offer, noted George Pipas, Ford sales analyst.

In the past, GM also has been successful in pumping up sales, notably in December 2003 when it was reaching to maintain a fraction of a point of market share for the calendar year. The auto giant's sales suffered during the subsequent two months because so many sales had been pulled forward into December.

"The interesting thing about a clear, compelling message is that it's a clear, compelling message,'' Pipas said. "Customers know when it's on and when it's off."

Ballew, however, insisted the success of the employee discount plan had built in some immunity against a big collapse in sales later this summer. By GM's calculations, 150,000 of the total sales in June were conquests or buyers who did not own or trade in a GM vehicle. Thus, the payback from pulling forward sales of loyal buyers will be smaller, he suggested.

Mark LaNeve, GM vice president of marketing, also noted the success of the program from its big demand for trucks. Sales of the Chevrolet Silverado increased 69 percent, he noted. "We see this as an indication that America 's desire for trucks and SUVs is still a strong force in the marketplace,'' he said.

GM's passenger car business, however, didn't benefit nearly as much as its truck business despite a strong showing by the Chevrolet Cobalt. Overall, GM's car sales were actually down slightly.

 

Some Guy Some Guy
New User | Posts: 17 | Joined: 02/05
Posted: 07/06/05
08:51 AM

Anyone see a few problems in there?

"
The employee discounts increased GM incentive spending by $900 per vehicle."  That's by $900, not to $900.  Aren't they just digging a deeper hole, and wasn't per-car profit negative to begin with?

"Overall, GM's car sales were actually down slightly."  Minor detail there.

Ah but here's the kicker.  Follow-up story:

GM Extends Employee Pricing

General Motors Corp. on Tuesday extended its "Employee Discount for Everyone" consumer incentives program through Aug. 1, a move that is prompting Ford and Chrysler to mount similar programs to move excess inventories and keep GM from gobbling up market share.

Under the program, which was launched last month, GM has been selling 2005 model cars and trucks at the same lower price a GM employee would pay. The marketing campaign drove GM's t="on">lace wEmotion 7t="on">U.S.lace> sales up 41 percent in June, the company's best sales month in 19 years. The actual fallout from the heavy discounting won't show up until GM reports its second quarter earnings later this month. It cost GM an estimated $250 million more in June to sell 558,000 vehicles than it would have if it had sold the same number at May's incentive level.

Chrysler is expected to announce an employee pricing campaign on Wednesday, while Ford on Tuesday announced the "Ford Family Plan," similar to GM's program, which will run through Aug. 1 and shave thousands of dollars off the sticker prices.

Autodata Corp. of Woodcliff Lake, New Jersey, said GM's June incentives increased about eleven percent over May's, to an industry-leading average of $4458 per vehicle. Chrysler sales were up just one percent in June while Ford's fell. Meanwhile, t="on">lace wEmotion 7t="on">Toyotalace>'s and Nissan's sales were up by double digits in June.

GM and its domestic rivals are venturing into charted, but treacherous pricing waters. Led by GM, the Big Three stuck with zero-percent financing long after the panic of the 2001 terrorist attacks had faded. When the automakers backed off the offers, consumers learned to wait the companies out until they were reinstated. Faced with a $1.1 billion loss in the first quarter, falling market share and swelled stocks, GM turned to "employee pricing" in June as a message simplifier.

While GM hopes to be able to back off profit munching discounting in the near future, especially with new products, the simpler pricing strategy is in keeping with sales and marketing chief Mark LaNeve's master plan. "We've learned that the simpler the pricing is the better consumers respond," said LaNeve in a recent interview.

What the success of GM's program shows is that despite GM losing market share in recent years, there is demand for GM products at the right price. The problem for GM is that price tends to be below what t="on">Toyota can charge for a comparable vehicle, and t="on">lace wEmotion 7t="on">Toyotalace>'s fixed costs are much lower than GM's.

Just what "employee pricing" does to earnings remains to be seen. It won't show up in Chrysler and Ford's earnings until October when third-quarter results are reported. That's a long way off for finding out whether they might have made the right move or not in following GM down the barrel of a pricing cannon.

Who didn't see that one coming?
 

StompSoCal StompSoCal
New User | Posts: 23 | Joined: 06/05
Posted: 07/06/05
09:35 AM

And now for the specifics:

"Car sales were not so hot with the exception of Buick (+18%), with Chevy passenger cars up only 2%, Saturn down about 1%, and Pontiac selling 14% fewer cars.  How did GM’s competitors fare in all of this?  The most likely victim of GM’s success would be Ford, but their sales remained relatively flat.  Toyota was up 14% over a year ago, Honda was up 9%, Nissan shot up nearly 19%, and DCX was up 5%.  So much for gaining much-desired “conquest” sales.  Isuzu, Mitsubishi, Mazda, and VW were all down for the month, but it’s likely that all of them save Mazda would have posted similar results even without the GM sale."

Sounds more and more like they're just selling to the people who would've bought the cars anyway, only at lower prices.  Pontiac's the closest thing they have to a "conquest" brand (democrats, import intenders, etc).

 

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