GM Inside News Forum banner
1 - 10 of 10 Posts

·
Premium Member
Joined
·
14,692 Posts
Discussion Starter · #1 ·
New cars don't slow rebates
Tough market forces discounts, rebates, even on new models
By Christine Tierney
The Detroit News

The incentive habit is proving hard to kick for Detroit automakers even though they are flooding showrooms with a wave of new cars and trucks.

Even as automakers drove rebates to stratospheric levels to boost car sales, Big Three executives have been banking on new models to wean consumers off discounts that averaged $2,906 per vehicle, up 31 percent from a year ago.

But discounts are showing up not only on slow-sellers and aging models, but also on new vehicles still in the ramp-up phase.

Chryslers Pacifica wagon, General Motors Corp.s Buick Rainier sport utility vehicle and Fords Mercury Monterey minivan have been on the market less than a year, but already carry more than $4,500 in incentives, according to New Jersey-based Autodata Corp.

Its a troubling trend for Detroit?s automakers, which are counting on new, higher-quality cars and an economic upswing to restore profits after three lean years.

Automakers normally generate the highest return on a vehicle in its early years, when it looks fresh. But some brands are now flogging deals on new vehicles even before they hit the showroom.

"The days of being able to sell cars without incentives in this market are long gone," thats old and new models, said Morgan Stanley auto analyst Steve Girsky.

When Ford Motor Co. launched the new F-Series pickup last fall, one of its most popular and lucrative vehicles, the Dearborn automaker offered Ford truck owners loyalty bonuses to fend off Japanese rivals encroaching in the pickup market.

The Pacifica, with a starting price of $28,845, is caught between high-quality but less expensive minivans and entry-level premium marques costing a few thousand more, analysts say. Meanwhile, the Mercury Monterey suffers from consumer perceptions that Mercury models are just fancier and pricier versions of Fords.

"Unless the vehicle is truly unique, and demand is greater than supply, very few vehicles are exempt from needing some support to be competitive," says Ron Pinelli, president of Autodata.

Among the lucky few models that command their full sticker price are GM?s new Pontiac GTO sport coupe and Toyota's Prius gas-electric hybrid, popular with ecologically minded motorists. The powerful Dodge Viper, a cult favorite, also carries no incentives.

"Incentives motivate you to look at a car you normally wouldn't be able to afford," Davis said.

Over the past 20 years, customers have grown accustomed to discounts and rebates, which surged after September 11, 2001 as automakers acted to avert a sales slump.

More than a third of likely car buyers said they would probably not purchase a vehicle without incentives, according to a survey conducted last month by auto data consultants Kelley Blue Book and market research firm Harris Interactive.

Although automakers have been increasing base sticker prices, as well as incentives, they are not able to halt an erosion in pricing in the most competitive segments.

In the midsize sedan segment, including Toyota's Camry and Ford's Taurus, the major contenders have suffered declines in the transaction price over the past three years, with the exception of the Honda Accord, according to Power Information Network, the market research arm of J.D. Power and Associates.



Full Uncut Article Here

Also See
 

·
Registered
Joined
·
960 Posts
People are not that stupid. How do you justify a rebadge being several thousand more then the other division's version? Silly to mention the GTO: most of the cars were spoken for before they even hit the shores. I thought just 30K units?

The mini-vans will walk into a slaughter house in the fall. Between them and the Ford/DC/Japan competition, they won't be able to give them away.

GM better wake up and price these cars properly. Who's gonna buy a 30K Equinox when Trailblazers are available for 24K?

I was right about the Malibu. How did Chevy make the Vectra so ugly that it needs 2.8K rebates already. An old tech V6 is still an old tech V6.
 

·
Registered
Joined
·
8,862 Posts
Joey, it seems that you've taken an overdose of "unhappy" pills today; your most recent posts are decidely toxic. You even manage to turn a relatively benign, slightly upbeat note like GTO's not requiring any incentives as a negative point. What gives?
 

·
Registered
Joined
·
960 Posts
I like the GTO, but being a low volume import, or course there's no need for rebates. I'm glad about the rebates because I've been bashed about saying the 'Bu was an ugly implementation of Epsilon and the old V6 technology is a mistake. Obviously, the buying public has agreed with me. I want to buy a Nox but I don't feel it's any better then a CRV and I too will wait for incentives until it's priced in the same range with the same options.
 

·
Registered
Joined
·
3,882 Posts
Originally posted by joey@Mar 20 2004, 06:08 PM
I like the GTO, but being a low volume import, or course there's no need for rebates. I'm glad about the rebates because I've been bashed about saying the 'Bu was an ugly implementation of Epsilon and the old V6 technology is a mistake. Obviously, the buying public has agreed with me. I want to buy a Nox but I don't feel it's any better then a CRV and I too will wait for incentives until it's priced in the same range with the same options.
The vast majority of buyers in the mid-size sedan market aren't psuedo-technofiles that are more concerned with the description of their hardware than what it actually does. They are pleased that the Malibu's performance slots between the quick Accord V6 and the tepid Camry V6. Only the SE Camry could outrun the Malibu. And they are happy that the Malibu's gas mileage is considerably better than it's competitors.

The main problem with a the Malibu that it's an all-new car with the name of a mediocre, long-in-tooth sedan of last year, and that it's parked on dealer's lots next to larger Impalas with $2000 more incentives.

OK, and I'll concede that the bug-eyed front end may not be helping either, but then with the bulbous Camry and Accord, it's obvious that this market cares little about styling.

Nobody said the new Malibu was going to turn things around overnight. It's going to take more time to get word to Mr. and Mrs. Average Car Buyer all over the country. The Impala is in it's 5th year and sales are still growing.
 

·
Registered
Joined
·
809 Posts
I think that the domestic auto dealers are gonna be killed by incentives if they keep this up. I understand the idea of incentives and agree that they are a good idea but when you get up to the 2K region that's just too much. Bring them down to a respectable level with fresh new cars.
 

·
Registered
Joined
·
1,258 Posts
I'd like to point out that incentives are not nearly so common with new vehicles as this article tried to suggest. For example, the F-150's only incentive was a loyalty bonus if you were trading an old F-150 for a new one. Until a couple of weeks ago, that was the only bonus you could get for it (now there's a $1000 cash rebate I believe). The 0% financing is also slowly disappearing as a mainstream offer. Right now there are a lot of vehicles that aren't selling as well as it was hoped they would, so there's still some big discounting on them. As more new cars and SUVs are brought out and the public starts to realize how much higher quality they are than the stuff they remember from the 80's (probably the last time many Americans seriously considered a domestic vehicle), they'll start buying them. I think that Chrysler is suffering the most, however, because quality has not improved as much as it should have, and their styling is just not catching on well with the public. I saw a white CTS on the road today fairly up-close, and I really liked the styling. In pictures I wasn't so sure of it, but if they ever decide to offer an AWD version, I just might buy my first GM vehicle.
 

·
Registered
Joined
·
3,882 Posts
I'm not sure where the $2779 on the Malibu comes from because all I see is the $1750 rebate that's on them.

Or do they state these incentives as the maximum savings coming from financing the entire vehicle at the best discounted rate offered by GM? If it is, that's an overstatement in my opinion. Sure, the potential is out there, but how often is GM actually spending that much? Most people have some sort of down payment.
 

·
Registered
Joined
·
960 Posts
I'm seeing very little cash back right now. GM seems to be pushing 3.5% Smart buy with no money down and then you come up with a balloon payment in the 48th month. Nothing special if you ask me. You still have to pay sales tax up front. Savings on financing is still the best deal for GM, since it's all excess profit to them anyway. I also wonder what amount of the interest rate is the dealer adding on top? With the economy looking like it's gonna slow down again and gas prices still climbing, GM's gonna have to start better deals up again soon or they're gonna be burried in SUV's and trucks. The whole car line has nothing to brag about when compared to foreign competetion so the relative value is just not there. Prices have to drop.
 

·
Registered
Joined
·
4,056 Posts
While sitting at a local tire dealer to get a flat fixed (horrible weekend with having 2 tires get punctures-both after visiting our local hardware store!), I read the store's copy of Automobile (Apr 2004) which has an article of a guy looking for a Mercedes SL and having to pay $10,000 over sticker-and he feels that HE WAS LUCKY! The story goes on how he bought the right to buy a car. What total bull----!
As an engineer, I know that the vehicle (though quick and all that) is nothing more than a bucket of parts like any other car and is on this planet because somebody wants to make money from its sale. He'll probably tool around town feeling "special".
But on the other hand, there was something in the car's makeup that drew this guy to go to these lengths to get one.
Honda takes great pains to keep the personna (right word?) of their vehicles giving the greatest bang for the buck and that every model introduction was done after a long and arduous program. And they keep the value of the used cars up by offering a certification package that gives the buyer assurance. Regarding Honda, I wonder if they ever made a Civic station wagon. I hear many an owner of Ford's Escort wagon looking for a replacement. Something small, reliable and fun enough to drive but able to carry the groceries (please don't mention Aveo which looks cheap and carries the Made in korea tag so why not buy a Hyundai or Suzuki).

But returning to GM, everybody has been fed rebates so it is going to be an uphill battle. The best thing that they have going for them is reliability. Relliability is measureable unlike styling.
 
1 - 10 of 10 Posts
Top