July 27, 2005

DETROIT (AP) - General Motors Corp. (GM) plans to end next week its highly successful discount program that allowed customers to buy GM vehicles at the price employees pay, a company spokeswoman said Wednesday. The deal fueled a huge surge in GM sales in June and rivals Ford and Chrysler offered similar plans this month.

The program has been in place since June 1. It was originally scheduled to end July 5 but the company extended it until Monday, and some analysts and dealers had suspected GM would extend the program through Labor Day.

GM spokeswoman Deborah Silverman confirmed Wednesday that the company will end the program Monday. She said the company doesn't plan to announce any other incentive deals on Monday.

 

Interesting, I could swear I saw a commercial on TV last week where they said that they were extending the employee discount deal.

edit: nevermind, guess it actually was extended.

 

took my silverado in for some work and wow! the chevy dealer near me was pretty low on cars compared to 2 months ago. too bad they had to give them away to get them off the lot.

 

Man, this isn't really good news for GM since it doesn't really solve any problems. GM is losing a lot of money with these discounts.

 

They are also preparing to sell $55 billion in car loans from GMAC to BofA atarting with a $5B purchase next year. This is in part because GMAC Financing (which is profitable) needs to bolster cash reserves for the other branches of the GM empire (which is not profitable). GM needs more liquidity because it is harder to borrow money at lower rates after the rating companies downgraded their bonds to junk status. This shouldn't affect anyone who is fanancing their car through GMAC. GMAC will still administer it but BofA will get the interest payments (and assume the risk of default). Even though GM had the best monthly sales since 1986 in July, it still lost a lot of money that quarter.

 

I better pick up the CTS-V I was looking at yesterday.

 

after this employee pricing discount, can't you just get the same deal regardless when the inventory starts ballooning again?
i think they need a long term solution of less makes, less models, and better product.

 

The only non-profitable business line for GM is its North American car division. The reason is completely tied to its employee benefits package which the union will not negotiate out of. The basic line working is making around $70/hour when benefits are included. That is simply way too much money to pay someone to work assembly.

Until this is straightened out, they will continue to suffer. As they continue to lose money, their products will suffer as well. I would avoid buying any GM products until they can negotiate something with the unions and start making profits in North America.

 

Basically what GM has is NSX pricing on most of it's cars. My god, I was fooling around on kelly-blue-book to see what my car is worth, this guy said for me to look up his Tahoe which is a 2003 with 35k miles. I plugged everything in and he guessed it would be worth $32K (private party sale) but it was worth $26K.

I asked how much the MSRP was and he said $52K. I was like are we talking about a chevy Tahoe? That's insane. Then he tells me he paid $35K b/c his wife's father somehow gets a deal (even better than employee discount)

that's fine, but IMO $35ish is what they should be selling for in the first place NOT $52K it's insane to think anything from Chevy has a MSRP over $50k. I even have a hard time with $50+k vettes they're still Chevys right? Even the C5 Z06 was selling well under $50K in 2003-04. Yes the C6 Z06 is worth $65K but that's the only chevy worth over $50k IMO not some stinking Tahoe.

A lady I work with her husband bought an anniversary C5 vert about 4 years ago and it was close to $60K and he paid MSRP, so then 1-2 years later (in 2003-04) you can take $12K off a Vert, how's that make you feel if you bought at MSRP?

 

Where in the do you get that?

They are still selling the cars for a profit -- and get this -- the EXACT ING SAME profit they were selling them before.

The dealer pays invoice -- invoice has not changed ... figure it out.