New GMT900's Will Be "Value Priced"

[Perian]

Link: http://www.autonews.com/article.cms?articleId=55780

New GM SUVs will be value priced.

Discounts to be used on older products.

DETROIT -- Despite General Motors' rocky introduction of value pricing, the automaker will stick with it when it introduces redesigned full-sized SUVs in January.

Rick Wagoner: GM's value pricing has spurred sales.

DETROIT -- Despite General Motors’ rocky introduction of value pricing, the automaker will stick with it when it introduces redesigned full-sized SUVs in January.

The question is: Can GM sell these vehicles without big rebates even as it offers generous incentives on older products? GM CEO Rick Wagoner says GM will continue to discount vehicles nearing the end of their life cycle.

“We’ve positioned some prices down, others we haven’t as much,” Wagoner said in a Dec. 8 interview with Automotive News. “It is much easier, when you have a new product, to (offer) a compelling price. That’s the time when you like to talk about product anyway, as opposed to the deal.”

Early next year, dealers will get a redesigned Chevrolet Tahoe, GMC Yukon, Cadillac Escalade, Chevrolet Suburban, GMC Yukon XL and Cadillac Escalade ESV. Later in the year, the GMC Sierra and Chevrolet Silverado pickups hit showrooms. Saturn also will get several new vehicles.

Value pricing means a lower sticker price on certain base models that is close to the actual transaction price. The transaction price is the average price paid for the vehicle.

GM markets the idea under the tag line Total Value Promise.

Value-priced vehicles carry little or no rebates. Last summer, GM cut sticker prices on 2006 models by an average of $301, or 1.1 percent, from final 2005 model year prices.

Some GM dealers say value pricing has not had a chance to lure Internet shoppers who compare prices online. That’s because GM keeps running big incentive programs that interrupt the automaker’s Total Value Promise marketing campaign, says Lynn Thompson, co-owner of Thompson Pontiac-GMC-Cadillac-Saab in Springfield, Mo.

“Value pricing is a six-month to a yearlong thing,” he says. “It will put GM back on people’s shopping list, but that takes awhile. It won’t just drive people in overnight.”

Value pricing hasn’t had much time to work, given that GM introduced the idea in the late spring, then went into a four-month national incentive program called “Employee Discount for Everyone.” When that ended on Sept. 30, GM let value pricing ride for October. But October sales plunged 25.9 percent from the October 2004 level.

In response, GM initiated its Red Tag sale. Under the sale, which runs from mid-November to Jan. 3, customers can buy virtually any 2005 or 2006 Buick, Pontiac, GMC or Chevrolet product for $100 over the price a supplier would pay -- generally $100 to $200 below invoice. The promotion does not include the Pontiac Solstice, Chevrolet Corvette or Buick Lucerne.

Still, Wagoner says, GM’s value pricing has successfully spurred sales for several new products this year.

“It’s not the reason the Pontiac Solstice has been a screaming success, but I think it’s part of it -- the fact that you can get a car like that for $19,995,” Wagoner said. “I think that was part of the gee-whiz of it.”

He says the Hummer H3 SUV, the Chevrolet Impala sedan and the Cadillac DTS sedan are other examples of value-priced vehicles. The H3 is a new product, while the DTS is a re-engineered, restyled successor to the DeVille. Hummer has sold 27,205 H3s and Cadillac has sold 18,061 DTSs through November.

Article continues at link.

[joey]

Here we go again.........
Let's save time and start the Red Tag sale now.
You know they're gonna be over priced.

[Arizona Slim]

“Value pricing is a six-month to a yearlong thing,” he says. “It will put GM back on people’s shopping list, but that takes awhile. It won’t just drive people in overnight.”

Six months? Way to think long term, Rick.

[mikest00]

Originally Posted by joey

Here we go again.........
Let's save time and start the Red Tag sale now.
You know they're gonna be over priced.

I think you may actually want to read the article.

Value-priced vehicles carry little or no rebates. Last summer, GM cut sticker prices on 2006 models by an average of $301, or 1.1 percent, from final 2005 model year prices..

IMO value pricing is a great idea. Great way to lure people to a new vehicle.

[ponchoman49]

So far this so called value pricing has not really lowered what the consumer pays for a car. Rather GM has used this opportunity to actually increase what most people are paying over comparable 05 models. The 05 Cobalt base sedan with auto/cruise was selling for $13,200 with employee discount. The 06 Cobalt sedan without bodyside moldings and with optional cruise/automatic is selling for $13,700. The Impala too in reality has gone up quite a bit. The average base 05 sedan with 1SB group was on sale for around $17995. Now the 06 versions in base LS form with no options but similar std equipment to last years 1SB version are red tagged at around $20,100. Understandably the 06 Impala is better but forget the under 20K prices in this value priced version. Lets face it, as each model year goes by we are now going to pay more and more for most models, especially as more and more stuff is being added as std equipment to suite the modern day gens appetite for gadgets.

[moman]

Great idea but won't work aside from the 10,000 people that must have the new Tahoe regardless of the price.

Everyone else will wait for rebates and sales.

[adplusone]

Best deal of the year on the Suburban's around here was $ 14k off during Employee Pricing. Does that mean the new Burbs will have an MSRP $ 14k less than this years? I think not....GM will probably reduce the price $ 1,400....and decontent it in the meanwhile.

I buy a new Burb about every 18 months....in the past three models GM has decontented out locking console, third row reading lights etc...little things yes but things you use.

Hopefully the new ones will have a hanger hook you can use. Whatever engineering team designed the current B pillar hanger has obviously never picked up the weekly dry cleaning.

[jckjds]

Originally Posted by ponchoman49

So far this so called value pricing has not really lowered what the consumer pays for a car. Rather GM has used this opportunity to actually increase what most people are paying over comparable 05 models. The 05 Cobalt base sedan with auto/cruise was selling for $13,200 with employee discount. The 06 Cobalt sedan without bodyside moldings and with optional cruise/automatic is selling for $13,700. The Impala too in reality has gone up quite a bit. The average base 05 sedan with 1SB group was on sale for around $17995. Now the 06 versions in base LS form with no options but similar std equipment to last years 1SB version are red tagged at around $20,100. Understandably the 06 Impala is better but forget the under 20K prices in this value priced version. Lets face it, as each model year goes by we are now going to pay more and more for most models, especially as more and more stuff is being added as std equipment to suite the modern day gens appetite for gadgets.

I don't think value pricing was supposed to decrease the actual prices being paid for a given car, but, rather, was intended to make MSRP's closer to actual transaction prices, which would decrease the need for rebates/incentive programs, etc.

[Snafu_SS]

Originally Posted by Arizona Slim

Six months? Way to think long term, Rick.

i agree

i thought value pricing was going to a be a part of GM from now on? how can 6 months to maybe a year really do anything when the first few months have already been overshadowed with red tag event sales!!??

granted im no executive here, and im also not an economics degree holder as well....but this sound right here?!!

[MittarFulgar]

Value-priced vehicles carry little or no rebates. Last summer, GM cut sticker prices on 2006 models by an average of $301, or 1.1 percent, from final 2005 model year prices.

And its rebates will proabably average in the thousands by year's end. So much for the value idea.

[lilredcrvtt]

G.M. vehicles are are already lower priced than many competitiors, with the final transaction price well below the asians. Great product will draw customers, that needs to be the focus.

[saturnsteve]

Value pricing is a joke, I have said that since the beginnig. Saturn always gets the screw job when it comes to this stuff! We don't get rebates, we get to hand out $500 Target Gift Cards. Man that really drives 'em to the store!!

[01cavalier]

Value pricing makes sense, but to make it work takes a lot of time, and rebates are never going to totally go away. Some people will wait for the rebates to be more and then finally buy, thats how its always been.

[Jay]

Originally Posted by Perian

Value-priced vehicles carry little or no rebates. Last summer, GM cut sticker prices on 2006 models by an average of $301, or 1.1 percent, from final 2005 model year prices.

Gee, how generous! I always laugh when they do the "Ring & Win" program up here and people win $500. I understand GM needs to make a profit and can't give away cars but $500 barely makes a dent in the price of a new car. Heck, a moderately equiped Saturn Ion costs over $20k before sales tax. A $500 discount is almost insulting. I think this is the beginning of a real problem: the costs of living and products increase and wages don't.

[KingElvis]

PEOPLE!!!

Everyone seems to be missing the most important part of "Red Tag" because they're falling all over themselves to savage GM.

As we say in the ad biz the "tagline" is (drumroll, please).....

"The price you see is the price you pay."

Even more important than weaning people off of rebates, is weaning buyers off of the "horsetrading" part of car buying.

If Red Tag and/or Value pricing makes people think "The price I see is the price I pay" then it will be a roaring success - for some reason no one mentions this.