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GM Slashing Prices on 80% of Vehicles


Dan Marino Forever 13
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GM CUTTING PRICES ON 80% OF FLEET

 

DETROIT - General Motors Corp., seeking to end six years of U.S. sales declines, will cut prices on cars and trucks representing about 90 percent of its U.S. volume, according to a person familiar with the plan.

The automaker next week will cut prices on all Buick, Chevy, Pontiac and GMC brand cars and trucks and two Cadillac models, according to the person, who didn't want to be identified because the information hasn't been released. The program would expand an August move that reduced prices or added features on more than 50 models. GM spokeswoman Deborah Silverman wouldn't comment.

 

"If people are comparing sticker prices, lower prices will certainly make their cars more attractive," said Jesse Toprak, senior analyst for vehicle pricing Web site Edmunds.com. "What really brings success to brands is good product. Playing with pricing alone isn't going to enable them to recover their market share. But I do believe a lot of their cars are overpriced and they needed an adjustment."

 

GM Chief Executive Officer Rick Wagoner said last month he expects GM's financial performance to improve in 2006 after losses totaling $3.8 billion through the first nine months of last year. GM's 26.2 percent U.S. market share in 2005 was the lowest in 80 years as Toyota Motor Corp. and other Asian automakers gained a record 36.5 percent share.

 

Mark LaNeve, GM's head of North American marketing, will make a "significant" announcement Tuesday at the North American International Auto Show in Detroit, spokesman Jeff Kuhlman said. He declined to comment on the content of the announcement.

 

GM shares rose 27 cents to $20.20 in New York Stock Exchange composite trading Friday. The shares have fallen 48 percent in the last year.

 

Demand for new and redesigned vehicles, including the 2007 Tahoe sport-utility, should help GM reduce spending on customer incentives this year, LaNeve told reporters Thursday at the Los Angeles Auto Show.

 

"With every new product we bring to market, we'd like to price it very aggressively," he said. He hinted at next week's announcement by saying GM will change list prices of existing models if it has to.

 

GM has said price reductions help improve comparisons for buyers who shop using the Internet. For example, the price of a 2006 Chevy Impala sedan at Edmunds.com ranges from $21,330 to $27,130. That compares with a Toyota Camry sedan at $18,445 to $25,805.

 

Investors aren't interested in whether GM cuts sticker prices, but whether the actual transaction, or selling price, improves as a result, said Darren Kimball, an analyst with Lehman Brothers Inc. in New York.

 

In the past, the gap between the sticker price and the transaction price has been wide as GM has used big incentives to sell vehicles, he noted.

 

GM is betting it can wean customers from huge discounts by offering a low price and touting the value and quality of its vehicles.

 

The four-cylinder Pontiac G6, for example, will see a price cut of about $3,000, and the Chevrolet Malibu sedan's sticker price will drop about $1,300, company officials said.

 

The 2006 Cadillac DTS will be priced more than $5,000 lower than its predecessor, the DeVille.

 

The retro-styled Chevrolet HHR, making its debut for 2006, has already been priced to compete with the Chrysler PT Cruiser, with a base sticker price at $15,990.

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If Pontiac is the performance divison of GM then why does it have a minivan?

 

If GM wants to save tens or hundreds of millions of dollars all they have to do is get rid of all chevy trucks: colorado, silverado, cargo van; just make GMC the only division to buy trucks. They would save money because then they wouldn't be making the same truck twice with a different logo on it.

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