GM's Truck-loads of Cash: Will It Put The Brakes on Toyota?

[1931Chevy]

http://www.cnbc.com/id/19690920
Forget the ads touting which full size pick-up has more hauling capacity, or which one can stop just before going over the edge of a cliff, or even which truck makes you feel more American, rural, or cowboy. None of that matters.

Here's what talks with truck buyers: cash. The more the better. And right now, pick-up buyers are picking up deals that have them sitting in the catbird seat. In fact, GM is doubling the cash back it's offering people who buy a new Chevy Silverado or GMC Sierra. That's an extra $1,000 on top of 0% financing.

Why would GM throw out such a an offer on new trucks that just came
out last fall? To keep up with Toyota , that's why. Yes, the Japanese automaker is finally hurting the Big 3 where it really hurts--in pick-up sales.

Last month, thanks to generous deals including 0% financing, Toyota Tundra sales shot up 21%. Meanwhile GM's total sales in June plunged thanks to weaker than expected truck sales. When I talked with people in motown last week, it was clear the hit in truck sales is not sitting well with American auto executives.

Since GM is #1 in trucks, and trucks are the vehicle in terms of profit, the boys in Detroit are giving dealers more ammunition to win over buyers. Will it help stop the erosion is sales? Perhaps at first. But this is not a long solution. Greater incentives hurt GM profit margins on trucks

[MOOSTOPHA]

if anyone wants to know, i posted a full explanation of these incentives in the dealer forum.

[CBECK]

This is retarded.

[Havasavana]

From the article: "If they have to keep rolling out 0% financing, the guys at Toyota will do that."

Toyota WILL sell their trucks. If they want to sell all the factories can make, they'll do it. GM is falling into a trap, plan B from Toyota is my guess, to chase Toyota down the price war path. Toyota would have preferred to sell at MSRP or close to it, but that plan didn't work. So they'll do what they have to do. If it were GM against just Toyota, I think GM would be ahead to let Toyota sell their production limit and keep their, GM's, incentives low. But it isn't just Toyota, it's also Ford and Dodge and GM has to compete with them. It's been obvious for months that this credible truck from Toyota will show the way for the final destruction of GM. Toyota doesn't have to outsell GM in trucks, just to take away enough profit so that GM sinks. I'm afraid the new Sequoia will do the same to GM's big SUVs.

[minnfang]

The author of the article seemed a little too giddy about the pressure that Toyota is putting on GM. Sucks when the media in your own country is rooting for your foreign rivals.

[DaJudge]

Originally Posted by minnfang

The author of the article seemed a little too giddy about the pressure that Toyota is putting on GM. Sucks when the media in your own country is rooting for your foreign rivals.

That's the way the American media works. I just don't understand not rooting for your own team.

[SDRacing]

doh! time to drop in the LS2!! The should work around the clock getting the six speeds built and have them here for 08!!

[supermoto]

Originally Posted by Havasavana

From the article: "If they have to keep rolling out 0% financing, the guys at Toyota will do that."

Toyota WILL sell their trucks. If they want to sell all the factories can make, they'll do it. GM is falling into a trap, plan B from Toyota is my guess, to chase Toyota down the price war path. Toyota would have preferred to sell at MSRP or close to it, but that plan didn't work. So they'll do what they have to do. If it were GM against just Toyota, I think GM would be ahead to let Toyota sell their production limit and keep their, GM's, incentives low. But it isn't just Toyota, it's also Ford and Dodge and GM has to compete with them. It's been obvious for months that this credible truck from Toyota will show the way for the final destruction of GM. Toyota doesn't have to outsell GM in trucks, just to take away enough profit so that GM sinks. I'm afraid the new Sequoia will do the same to GM's big SUVs.

I guess Toyota is just so totally invinceable that nothing could ever take them down a notch. Toyota could produce up to 300k Tundras, but the market will just not support those numbers without huge incentives. GM and Ford have been blasted for piling on incentives that hurt resale and then later hurt future sales, but for some reason there are those that believe that can't apply to Toyota. Guess again.

Once the pent up demand for a new truck from Toyota gets met, sales will reflect overall lower demand for trucks. the Tundra may be credible, but it's not superior. GM just needs the better perception of having a 6 speed auto available in the entire line. Ford just needs some bigger numbers for their engines. Both are coming shortly as well as diesel 1/2 tons that Toyota is behind on. the war is far from over and Toyota is far from winning it with their decling quality and their recent move to slow down on new plants in the US.

[cincygoblue]

Originally Posted by minnfang

The author of the article seemed a little too giddy about the pressure that Toyota is putting on GM. Sucks when the media in your own country is rooting for your foreign rivals.

And the government in your own country. Look at how much CAFE will help Toyota reign-in Big 3 Fullsize Truck and SUV sales.

Back to the issue at hand
GM should use the information from the other article in some ads, stating that "the average transaction price of a Tundra, even with the $5000 estimated rebates, is still $4,000 more than a Silverado." That will tell people the Tundra is still overpriced AND remind people that it isn't the AMOUNT of the rebate that's important so much as the FINAL TRANSACTION price. I CANNOT BELIEVE GM can't advertize this!!!

If it didn't hurt resale and reputation, etc., everyone could price their trucks at $80,000 and then offer a $60,000 rebate!!!!!!! Doesn't that sound great?

GM needs to avoid larger rebates completely and convince consumers they
1. have a better truck and
2. have a better value (transaction price, maintenance, resale, etc).

As I've said before . . . $1,000 on 800,000 trucks is 800 Million Dollars in rebate money. Just think what kind of marketing could be done with 800 Million Dollars, rather than giving it away and hurting resale and reputation.

[likearock00]

I think Havasavana hit the nail on the head. GM has hurt itself in the past as become the dicount king. People know before heading to the dealership that invoice price is where they need to get for numbers. It's rediculous. I understand that people want the most bang for the buck, but dealers need to stop letting this happen. They'll do anything for a sale. Toyota can discount these trucks because they have extra cash to recover....GM does not.

[Z06ified]

Both are coming shortly as well as diesel 1/2 tons that Toyota is behind on.

I agree. Diesel will be the quickest way to catch Toyota asleep at the wheel in the 1/2 ton truck market. Toyota seems to be very adverse to diesels, and their "everything hybrid" strategy is not going to work, especially in the truck market. Traditional pickup buyers will choose a diesel 9 times out of 10 over a hybrid if they are concerned about fuel economy with their truck.

[pinch a loaf]

Originally Posted by cincygoblue

And the government in your own country. Look at how much CAFE will help Toyota reign-in Big 3 Fullsize Truck and SUV sales.

Back to the issue at hand
GM should use the information from the other article in some ads, stating that "the average transaction price of a Tundra, even with the $5000 estimated rebates, is still $4,000 more than a Silverado." That will tell people the Tundra is still overpriced AND remind people that it isn't the AMOUNT of the rebate that's important so much as the FINAL TRANSACTION price. I CANNOT BELIEVE GM can't advertize this!!!

If it didn't hurt resale and reputation, etc., everyone could price their trucks at $80,000 and then offer a $60,000 rebate!!!!!!! Doesn't that sound great?

GM needs to avoid larger rebates completely and convince consumers they
1. have a better truck and
2. have a better value (transaction price, maintenance, resale, etc).

As I've said before . . . $1,000 on 800,000 trucks is 800 Million Dollars in rebate money. Just think what kind of marketing could be done with 800 Million Dollars, rather than giving it away and hurting resale and reputation.

I agree 100% on this. And for Christ's sake, do some descent advertising. I was in Toronto last week and I saw more GM's being advertised there than I have in the US. Show people what you have to offer and how you beat the competition. I can't understand why GM doesn't do more competitive advertising!!!!

[titanguy]

Originally Posted by pinch a loaf

I agree 100% on this. And for Christ's sake, do some descent advertising. I was in Toronto last week and I saw more GM's being advertised there than I have in the US. Show people what you have to offer and how you beat the competition. I can't understand why GM doesn't do more competitive advertising!!!!

What about running some ads like the Tundra has? Instead of running 'this is our country" which does nothing but act like a cry for help. That ad campaign does NOTHING to tell you why GM trucks are the best. How about putting together an ad from that video showing the Tundra's bed and triple tech frame bouncing like a pogo stick? I know you are not supposed to acknowledge your competition but GM's ads are so bland.

[ericmvest]

Originally Posted by supermoto

I guess Toyota is just so totally invinceable that nothing could ever take them down a notch. Toyota could produce up to 300k Tundras, but the market will just not support those numbers without huge incentives. GM and Ford have been blasted for piling on incentives that hurt resale and then later hurt future sales, but for some reason there are those that believe that can't apply to Toyota. Guess again.

Once the pent up demand for a new truck from Toyota gets met, sales will reflect overall lower demand for trucks. the Tundra may be credible, but it's not superior. GM just needs the better perception of having a 6 speed auto available in the entire line. Ford just needs some bigger numbers for their engines. Both are coming shortly as well as diesel 1/2 tons that Toyota is behind on. the war is far from over and Toyota is far from winning it with their decling quality and their recent move to slow down on new plants in the US.

Very well stated. If you take the legacy cost out of the picture and look at true variable and fixed product costs, General Motors and Ford should be able to build full-size pickups considerably cheaper than Toyota given their much larger economies of scale. General Motors and Ford can amortize fixed costs such as design, tooling, advertising, etc. over many more units. General Motors' and Ford's plants have comparable quality and efficiency of Toyota's plants therefore that is not much of a factor anymore. Also, not everyone wants to buy a Toyota. Each percentage point of the market will be harder for Toyota to get. Toyota will reach the point of diminishing marginal returns on advertising and incentives.

[ericmvest]

Originally Posted by cincygoblue

And the government in your own country. Look at how much CAFE will help Toyota reign-in Big 3 Fullsize Truck and SUV sales.

Back to the issue at hand
GM should use the information from the other article in some ads, stating that "the average transaction price of a Tundra, even with the $5000 estimated rebates, is still $4,000 more than a Silverado." That will tell people the Tundra is still overpriced AND remind people that it isn't the AMOUNT of the rebate that's important so much as the FINAL TRANSACTION price. I CANNOT BELIEVE GM can't advertize this!!!

If it didn't hurt resale and reputation, etc., everyone could price their trucks at $80,000 and then offer a $60,000 rebate!!!!!!! Doesn't that sound great?

GM needs to avoid larger rebates completely and convince consumers they
1. have a better truck and
2. have a better value (transaction price, maintenance, resale, etc).

As I've said before . . . $1,000 on 800,000 trucks is 800 Million Dollars in rebate money. Just think what kind of marketing could be done with 800 Million Dollars, rather than giving it away and hurting resale and reputation.

You are absolutely correct, General Motors needs much more aggressive product oriented advertising that addresses the competition.