elvis_knows
01-12-2006, 01:07 PM
GM gives dealers coupons to help close deals
Dealers handed $250 incentive certificates one day after carmaker cuts MSRP on most cars.
Brett Clanton / The Detroit News
January 12, 2006
A day after General Motors Corp. announced a major plan to cut sticker prices on most U.S. vehicle models, it quietly introduced a new incentive program for dealers to help them sell some models.
The automaker is offering its dealers $250 "instant value certificates" that can be used as closing tools in the sale of GMC and Chevrolet SUVs and pickups, according to a letter sent to GM dealers Wednesday that was obtained by The Detroit News.
Each dealer will be given a specific number of certificates based on sales volume and other criteria and can offer customers up to four certificates -- or $1,000 in rebates -- to close a sale.
Also Wednesday, GM rolled out a range of new customer cash rebates, which are lower than previous offerings but still large in categories where competitors have a lot of cash on the hood.
In the full-size pickup truck category, for instance, GM lowered cash rebates to $1,500 per vehicle, down from $2,500 in December.
GM introduced a new pricing strategy as a way to reduce its overall spending on incentives, which have cut into company profits, cheapened the image of the brands and made consumers dependent on the next good deal to shop for GM vehicles.
Under the plan, the automaker said it will cut sticker prices on 80 percent of its U.S. sales volume.
The strategy is part of a broader effort to put the focus back on GM cars and trucks and pare back incentive spending, which in December was $3,827 per vehicle, according to Autodata Corp.
By lowering incentives, GM faces huge risks in losing buyers conditioned to expect a big deal and is betting its new vehicles will be enough to sway carbuyers, said David Cole, chairman of the Center for Automotive Research in Ann Arbor.
"There's a big high-stakes game under way that makes the stuff that goes on in Las Vegas look pretty trivial," he said.
GM spokesman Jeff Kuhlman said the new incentive programs are consistent with the automaker's new pricing strategy of using discounts more strategically.
In the case of the $250 dealer certificates, he said the program -- which runs until Feb. 28 -- is designed to help clear out aging truck models before the arrival of 2007 replacements this year, which will be priced lower than their predecessors. And new customer cash rebates -- running until Jan. 31 -- are necessary to remain competitive in certain segments, he said.
"We've got to give our dealers something to work with," he said.
But Frank Ursomarso, a Pontiac-GMC dealer in Union Park, N.J., said the new pricing program actually gives him less flexibility to sell vehicles than he had before. Lower sticker prices mean he has less room to negotiate with customers and a slimmer margin to "run plays" in closing a deal.
"If they had a 100-yard field before," he said, "they just made the football field 40 yards long."
Dealers handed $250 incentive certificates one day after carmaker cuts MSRP on most cars.
Brett Clanton / The Detroit News
January 12, 2006
A day after General Motors Corp. announced a major plan to cut sticker prices on most U.S. vehicle models, it quietly introduced a new incentive program for dealers to help them sell some models.
The automaker is offering its dealers $250 "instant value certificates" that can be used as closing tools in the sale of GMC and Chevrolet SUVs and pickups, according to a letter sent to GM dealers Wednesday that was obtained by The Detroit News.
Each dealer will be given a specific number of certificates based on sales volume and other criteria and can offer customers up to four certificates -- or $1,000 in rebates -- to close a sale.
Also Wednesday, GM rolled out a range of new customer cash rebates, which are lower than previous offerings but still large in categories where competitors have a lot of cash on the hood.
In the full-size pickup truck category, for instance, GM lowered cash rebates to $1,500 per vehicle, down from $2,500 in December.
GM introduced a new pricing strategy as a way to reduce its overall spending on incentives, which have cut into company profits, cheapened the image of the brands and made consumers dependent on the next good deal to shop for GM vehicles.
Under the plan, the automaker said it will cut sticker prices on 80 percent of its U.S. sales volume.
The strategy is part of a broader effort to put the focus back on GM cars and trucks and pare back incentive spending, which in December was $3,827 per vehicle, according to Autodata Corp.
By lowering incentives, GM faces huge risks in losing buyers conditioned to expect a big deal and is betting its new vehicles will be enough to sway carbuyers, said David Cole, chairman of the Center for Automotive Research in Ann Arbor.
"There's a big high-stakes game under way that makes the stuff that goes on in Las Vegas look pretty trivial," he said.
GM spokesman Jeff Kuhlman said the new incentive programs are consistent with the automaker's new pricing strategy of using discounts more strategically.
In the case of the $250 dealer certificates, he said the program -- which runs until Feb. 28 -- is designed to help clear out aging truck models before the arrival of 2007 replacements this year, which will be priced lower than their predecessors. And new customer cash rebates -- running until Jan. 31 -- are necessary to remain competitive in certain segments, he said.
"We've got to give our dealers something to work with," he said.
But Frank Ursomarso, a Pontiac-GMC dealer in Union Park, N.J., said the new pricing program actually gives him less flexibility to sell vehicles than he had before. Lower sticker prices mean he has less room to negotiate with customers and a slimmer margin to "run plays" in closing a deal.
"If they had a 100-yard field before," he said, "they just made the football field 40 yards long."