USA TODAY: GM backs away from rebates...but doesn't rule them out

[Globalist]

http://biz.yahoo.com/usat/060106/13322377.html?.v=3

USATODAY.com
GM backs away from rebates but doesn't rule them out
Friday January 6, 4:32 pm ET

General Motors (GM) CEO Rick Wagoner says the automaker is still committed to weaning customers off big rebates, although he's not counting out future splashy deals like the one last summer that gave the employee discount to all buyers.
The automaker will roll out 16 new models this year that will carry sticker prices much closer to what GM expects customers actually will pay for them rather than slapping on a $3,000 rebate to attract buyers.

"It's an oversimplification to say it's one price, but that's basically the direction we've been moving in," Wagoner said Friday. GM is expected to talk about its pricing strategy Tuesday at the North American International Auto Show here.

Employee discounts were successful when they first came out, boosting GM's market share to over 32% in June from 25.9% the year before. But after three months of offering the discount, sales and market share began to fall. Wagoner admits the company let the program run too long.

But even as the automaker moves away from big rebates, Wagoner says there will always be room for some kind of incentive. "There's probably always going to be something that you need to put a little juice behind," he says.

GM began offering $3,000 rebates and zero percent financing after the Sept. 11 terrorist attacks in an attempt to keep the car market afloat. But the company and its competitors found that to keep customers coming, they had to offer more and more cash back. Rebates on some models topped $7,000 at one point.

Using big discounts to lower sticker prices may have cost GM customers who use the Internet to research cars. Those buyers can filter cars by sticker prices, and often don't look deep enough to discover the big rebates that lower those prices.

The move toward lower sticker prices is not a new one, even for GM. Asian automakers have used the strategy for a long time. And last August, GM lowered prices and added content on 50 of its nearly 90 2006 models.

But Mike Jackson, CEO of AutoNation, the largest dealership group, says GM didn't trim prices far and fast enough.

"I think there was the unique chance after employee pricing to do something dramatic, but they obviously have decided to take a longer route," he says.

[asim]

At least they can hopefully have the MSRP lower to the actual transaction price...

[LAMRONH]

Well, no wishy-washy Wagoneer here, just a firm, flexible line in the sand as usual.
I wonder if it would be possible to hire a handler for this guy, someone to jerk his chain so he stops making a total a$$ of himself every time he opens his shoetree.
This is embarassing. Does this guy have no insight or self-awareness?

[stevecmh]

I am glad to see them moving away from rebates. Maybe now they can turn a profit... I just hope people buy the cars.

[DuSpinnst]

Yay! Lower prices make me happy.

[VivienM]

Originally Posted by stevecmh

I am glad to see them moving away from rebates. Maybe now they can turn a profit... I just hope people buy the cars.

Isn't that exactly what people said when they introduced the "Total Value Promise" or whatever it was back in September?

They need to have real MSRP cuts, not cosmetic price drops...

[mjd1001]

Originally Posted by VivienM

Isn't that exactly what people said when they introduced the "Total Value Promise" or whatever it was back in September?

They need to have real MSRP cuts, not cosmetic price drops...

Use rebates only when they are needed. Keep the MSRP low enough so that you don't need rebates...then ONLY slap them on at the end of the model year (2 months before the 2006's come out, put them on the 2005's) or when a car is pretty far into its lifespan (the current Grand Prix has now been around for a few years...maybe start the model year with a modest rebate).

[kenman923]

The price cutting will definitely make the cars more attractive.

[mikee]

Hmmm... Another attempt of a Kmart "Blue light special" from generic motors! LOL!

[Cortazzo]

Look a what chrysler did with the lx cars, only the 2005s have rebates but the msrp is very reasonable and the cars are great.

[chevydlrmn]

i heard there will be a sale to kick off with the new tahoe on the 10th. we'll see if this is they jump to another event, if so , they should have started it right ath the begining of the year.

[04Malibu]

Total value would mean extending the warranty to 50,000 or even 75,000 miles. If GM's quality is really up to par with what they say it is, why are they so unwilling to do that?

[joey]

Dealers and GM must hate the extended warranties. They don't want you keeping the car that long. The quality of parts has suffered over the years. They want you in that showroom every 3 years. It's getting too expensive to have a dealer work on your 5 yr old car at their cost.

[steverino]

With todays technology and embedded electronics in vehicles, GM should develope and electronic MSRP which can be changed on the fly to keep competition off balance. For example, if inventory is high on a certain vehicle model, a signal can be sent to reduce sticker by 2% (or whatever amount needed). GM can do brand/model comparisons to competition (Impala vs Camry) and bring price at or below for a period of time. This keeps prices in line with competition, now and then lower the price and sneak a sale in on the competition without them even realizing it.

[tripowergto]

As long as they value price every brand new model as it's released, like they already have with the Solstice, HHR, Lucerne and (hopefully) the new Tahoe then I think it's fine to continue rebates on the older models to help move the metal. Like electronics, the older a model gets the cheaper they should become as start up costs are already recovered. While the existing Malibu may be a good overall car, it's too homely to truly compete against its current competition so why not blow'em out as cheaply as possible for sake of higher volume until the replacement arrives. Those that purchase should be happy with it's quality and hopefully will return with their next purchase.