GM, Ford Pare Back on Incentives

[nsap]

GM and Ford throttled back incentives on new cars and trucks slightly Tuesday after steep discounts in September and October helped the automakers pare down inventories of remaining 2004 models.

General Motors Corp. reduced rebates by $500 on some 2004 cars and trucks and discontinued cash bonuses for financing through GMAC on 2005 vehicles, but raised rebates on mid-size sport utility vehicles to $2,000. Cut-rate financing options were virtually unchanged from last month's "Truckfest" program, according to GM spokeswoman Deborah Silverman.

GM also is running a regional direct mail campaign to selected customers offering to pay up to $1,000 toward their payments for up to three months. All the offers run through Jan.3, 2005.

Steve Cook, a Vassar Chevrolet, Buick, Pontiac, Oldsmobile dealer, was not bowled over by the new program saying, "I don't see that moving the market in any great way at this point."

Ford Motor Co. extended most of its offers that expired Monday until Nov. 30 or Jan. 3, 2005, according to spokesman David Reuter.

Since early October, Ford has offered cash rebates of $2,000 to $6,000 on 2004 model Ford, Lincoln and Mercury vehicles, and zero to $2,000 on 2005 models. On Tuesday, Ford reduced rebates by $500 on several models including the 2005 Explorer and Expedition sport-utility vehicles.

http://www.detnews.com/2004/autosins...b01-323775.htm

[tgagneguam]

Unfortunately, based on GM's present woes, I'm not so sure this will necessarily translate into greater profits for Q4 and beyond. A measured waning of incentives seem to be in order, though.

[atomicshark]

GM should price their cars according to what the market will handle without incentives. For example, maybe the Malibu Maxx should cost 19,995 without incentives for the lower LS model. The high end LT should start at $22,995. This would help give the car a look of huge value without killing it's resale value as it ages. Isn't it much better to reduce prices by $2,000 than to offer $3,000 or more in rebates, which gives the car a feeling of it not being worth anything near sticker price.

[HEVguy]

Originally Posted by atomicshark

GM should price their cars according to what the market will handle without incentives. For example, maybe the Malibu Maxx should cost 19,995 without incentives for the lower LS model. The high end LT should start at $22,995. This would help give the car a look of huge value without killing it's resale value as it ages. Isn't it much better to reduce prices by $2,000 than to offer $3,000 or more in rebates, which gives the car a feeling of it not being worth anything near sticker price.

Good points, I've thought about that before also. Just price'm closer to what they should be sold for, but not as low as the incentives bring them down. Let people bargain out the rest or offer smaller incentives to help people feel they are still getting a bargain.

At least they are going in the right direction with reducing the incentives though.

[leachwilson]

We are not seeing anybody in the showroom the last couple of days. The new car business is in a wait see on the rebates. Customers are waiting to see what GM does.

[zaxxis]

Originally Posted by atomicshark

GM should price their cars according to what the market will handle without incentives. For example, maybe the Malibu Maxx should cost 19,995 without incentives for the lower LS model. The high end LT should start at $22,995. This would help give the car a look of huge value without killing it's resale value as it ages. Isn't it much better to reduce prices by $2,000 than to offer $3,000 or more in rebates, which gives the car a feeling of it not being worth anything near sticker price.

There is one big problem with this : Many people NEVER want to pay "regular" price on most goods or services. This is why companies have SALES.

Things to consider:
- People will spend many hours searching for deals. Even though they may just save pennies, once you figure in how much time was wasted in finding the deal.
- Millions of people belong to "clubs" at the local supermarket to "save" but the reality is prices have gone up. But customers still feel like they are saving.
- Rebates and haggling have been around for so long, everyone expects them.
- Many dealers reclaim the rebates in other items, like trade-ins.
- Not everyone qualifys for a rebate. By setting the price to "current price - rebate", you've effectively gave everone the rebate. HOWEVER, the rebate did get the person to the dealership, so the likelood of selling something has at least increased.

While I think rebates are bad and I wish they would go away, you have to understand the marketing aspect of it. For companies, rebates are a huge tool to get people to buy goods. Heck... wonder how much money Best Buy makes from all the mail-in rebates that people never submit?

Personally, I think Auto industry should tone down the rebates and go to a no-haggle sales. I think almost every company would come out better if they didn't look so slimy and greedy.

-Z

[paul3230]

GM is trying to shore up profits for Q4