G6 and Lacrosse Sales Stagnating

[mgescuro]

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http://online.wsj.com/article/0,,SB110869070405858565,00.html?mod=home_whats_new s_us

GM Boosts Incentives, Slows Work On New Models Amid Tepid Sales
By LEE HAWKINS JR.
Staff Reporter of THE WALL STREET JOURNAL
February 18, 2005

DETROIT -- General Motors Corp., already bracing for a tough 2005 because of flagging truck sales, is now showing signs of trouble selling two of the new cars it had been expecting to pick up the slack this year.

The company in the last week or so has increased incentives on the Pontiac G6 and the Buick LaCrosse as a result of sluggish sales, and has prepared to scale back production at the factory that assembles the G6.

GM recently told workers at its plant in Orion, Mich., that it is reducing the number of cars it wants produced each hour and delaying the start of a second shift of production until after the company's annual plant shutdown in July.

The company had planned to start the second shift in the spring.

Paul Ballew, GM's executive director of market and industry analysis, said production is ramping up slowly at the plant because not all versions of the G6 are in the market yet, such as a model with a four-cylinder engine. "We don't get the coupes until the summer, and we don't get the convertible until after that," he said. "We've been delayed in bringing some of the the new versions of the G6 out."

Mr. Ballew said G6 sales are "pretty good" but acknowledged they are "not off the charts." GM expects to sell about 6,000 G6s this month, up from about 4,000 last month, he said.

The slow start of the G6 and LaCrosse sales comes at a difficult point for GM, the world's largest car maker. In 2004, GM lost market share and was forced to cut production as Japanese rivals such as Toyota Motor Corp. and Nissan Motor Co. posted substantially higher sales of mainstream cars. At the same time, luxury-car makers such as BMW AG are expanding further into midprice segments that GM once dominated.

In January, GM said 2005 earnings would fall by about a third to between $4 and $5 a share, as a result of a $1 billion increase in health-care costs, a substantial loss in Europe and lower profit at its financing arm.

It is also suffering from an aging line of pickup trucks and big sports-utility vehicles, such as the Chevy Suburban and GMC Yukon, that normally generate substantial profit. These sales are falling as GM prepares to launch new versions in 2006.

The LaCrosse and especially the G6 were supposed to help smooth the ride in the meantime. The design direction for both vehicles was heavily influenced by GM's vice chairman and product chief, Bob Lutz, who has promised that eye-catching styling would pull new customers to GM brands.

GM has promoted the G6 heavily in TV commercials and got a boost last fall when it was featured on the Oprah Winfrey show. Ms. Winfrey surprised her audience by giving each member a G6, about 100 cars in all, a publicity coup that generated reams of coverage on TV, and in newspapers and magazines.

But few GM dealers had the vehicle on their lots at that time, and complained they were unable to capitalize on the short-term interest at their lots on the weekend following the Oprah Winfrey segment.

Now, inventories of the G6 and LaCrosse are piling up at dealerships. The company currently has a 123-day supply of the G6 -- about double the normal amount. It has enough LaCrosses in inventory to last about 122 days at the current selling rate.

"It's a real competitive segment. We still feel that the G6 sedan has been a successful launch, and it is being well received in the marketplace," said Chris Lee, a GM spokesman.

To boost sales, GM beefed up both general and regional incentives this month on the G6 and the LaCrosse. It is now offering between $1,500 and $2,000 in rebates, depending on the region, or low-interest financing such as 0% interest rates on 36-month loans. Buyers in all regions who trade in cars from competing manufacturers can receive another $1,000.

GM also has given dealers coupons allowing them to cut the prices on the G6 or LaCrosse by up to an additional $1,000, said Mark McCready, director of strategy and marketing analysis for Carsdirect.com.

[syr74]

Recall when people were giving tales of doom for the 500 and Montego? Both of these GM's are brand new and already the General has had to crank up the rebates. This does not bode well for either, but it would appear to be par for the course.

[s113]

I thought I read elsewhere that the G6 was already a "best seller"? Not to put down the G6 or anything; it just seems that I read quite a few conflicting auto reports these days.

[dav305z]

Eh, again making mountains out of molehills it would seem. The press likes to create a theme and then find every sign they can for it. They've been on a "Detroit is in deep s---" tear for a while now. Yes, they're saying the same thing about Five Hundred. Again, new models - especially brand new ones - do not simply explode on the market place unless they are extraordinary and unique offerings along the lines of the 300C. I'll worry if this isn't turned around by June or July.

[BigAls87Z28]

Sorry to hear that, cause that really sucks. The G6 is a much more attractive car then the Malibu, I dont see why it doesnt sell well? Oh well, I hope more luck for the coupe and hard top vert as well as more mass-sales with the cheaper 4cyl models and higher 3.9 V6 sales.

[hudson32]

I'm disappointed to hear this. GM has put a lot at stake for those two cars. But then again, lets wait till July, as dav350z says. The G6 is quite a nice car and I was hoping for better. The LaCrosse just doesn't have the interior space like the Ford 500 and the 300C. The car is bigger than the Accord and Camry exteriorwise, but there isn't the spaciousness you get in a 500. I sure hope the Lucerne can pick sales up, because I that design is sleek and trendy.

[FusionSVT]

What did they expect? Its like they didnt even sit in the backseat before. When I was at the auto show(detroit) to look at the G6 I was hitting my head in the backseat just sitting upright normally. How am I supposed to buy a car when im hitting my head? Im 6,2 just so you know. What GM needs to do is take away the restrictions and allow the laissez-faire policy thats been going on at Chrysler and also they need to focus on one brand and not overload themselves by trying to redo every brand at the same time. It makes for a good story to say that youre adding 20 new vehicles, but its not a very good buisness story. Size down and build Quality not Quantity.

[mgescuro]

I tend to the trust WSJ over most other media sources. I tend to think they are more fair but definitely have a more business slant to the reporting (obviously).

Not exactly the "gloom and doom" article you see elsewhere, as it does say that G6 is at a run rate of about 6,000 a month and says it's an improvement. That's 72,000 a year. What was the Grand Ams monthly sale total?? Seeing as it was usually in the Top 10 ... it probably sold much more than 6,000/mo.

So.... this isn't very good. Though, the ramp up is continuing. You'd think that sales would pick up. But it's not. The other question is... why is the ramp up taking so $#@!!! SLOW?? Taking your time to ramp up is one thing, but G6 has been on the market for months!!! Why aren't all the models being sold?? And I'm not talking about the coupe and covertible.

But for every bad GM launch... there's a bright spot... like Cadillac not being able to meet demand for the STS4. And the media said that $62K would be too much to pay for any STS. So... go figure.

[BigAls87Z28]

Well, if you think about it, the G6 is going on one model with one engine. Grand Am had 2 and 4dr with 4cy cheap model with 6cyl GT.
So if the G6 can sell 6k units BEFORE the other options roll in, I think thats pretty **************** good. I think the other options are worth at least another 2k units over the 4-6k we see now. Honestly, G6 has more future then the LaCrosse or the Ford twins where thats pretty much it as far as content. Ford has a bigger V6, but nothing else really...no coupe, no convertable, nothing is going to change. LaCrosse is pretty much it. Maybe if it gets a 6spd auto, but thats it. The car is as good as its gunna get without a redo.
Its way too early to write off the G6, but the LaCrosse sales have me upset. It is a very handsom car.

[jaorobot]

G6 and Lacrosse will be like the impala, start slower and ramp up..

g6 sales are good and will only get better with the grand am fully being sold out and the coupe/hardtop cvt and 4cyl hitting the market...

lacrosse is going to do well, in my opinion, but start slower..

i have been at the chicago auto show almost EVERY day (all but 1) and the buick section is really changing peoples minds.. i've heard from 4 fellow employees of mine (in a competitors booth) that buick looks good.. as 2 of them put, in the EXACT same wording "buick is coming back!"

that lacrosse seriously looks nicer in CXS trim in black than 99% of the cars at the chicago auto show, including most of the luxuries.. it simply is stunning in person.

edit:
also wanted to add, dieter or whatever his name is (president of dahmler chrysler) was at the chicago auto show today.. saw him in a pt cruiser doing the "drive and ride" thing... he looked funny in the back of that pt convert with his giant mustache.

[Kar Krazie]

I think maybe they just need time to grow on people and when they start to see them and they become more popular sales will increase.

[crazywop112]

G6 sales will pick up in a few months. I think the release of the V8 Monte Carlo and Impala will give GM the boost their looking for.

[mgescuro]

Originally Posted by crazywop112

G6 sales will pick up in a few months. I think the release of the V8 Monte Carlo and Impala will give GM the boost their looking for.

I'm not totally convinced that the Monte and the Impala will be the "right cars" to help boost sales. Remember, Impala only sells well because of fleet sales.

I would have expected G6 sales to be a lot higher than 6,000/month at this point in time. It's been advertised heavily since the Athens Olympics!! Price might be too high for what you get in a G6. Maybe they should ahve knocked off $1,500-2000 from the MSRP in the first place so sales would have been higher. G6 has some big shoes to fill when it comes to the Grand Am's sales figures. Right now, it's not even close.

[Bravada]

Originally Posted by mgescuro

I tend to the trust WSJ over most other media sources. I tend to think they are more fair but definitely have a more business slant to the reporting (obviously).

I agree with you on that! WSJ seems to be the last bastion of old-style journalism, where facts not opinions are what matters, and impartiality is brought to the extreme. They are my primary source of information on everything (maybe I'm wrong on that, but I love the way they don't have photos but siderography instead!)

Chrysler's boss is Dieter Zetsche and he seems to be doing suprisingly well now, being able to finance the mess his corporate-politics-obsessed colleagues have done in Germany.

[goblue]

This is what you expect when you bring out vehicles that get reviews like - thats great, but... - you should consider Brand H or T instead. If you can't design a vehicle thats at the top of the class on release, great sales are not assured.

I personally think the reason comes down to powertrains. The OHV 6s and 4 speed autos are simply getting trashed left and right. Had the G6 launched with the 2.4 -4, 2.8 -6 and 3.6-6 and a 5 speed auto with opt 6 speed man, I wouldn't be writing this post right now. I've had many friends say they won't even consider it b/c of this, and they are right in the demographic.

Pushrods are fine, have many advantages - but they need to evolve, now. I won't consider the GM 6 cyl OHVs to be a great engine until they have VVT, DOD, and 3V architecture and can rev to 6K without sounding like they are going to break.