GM Employee Discount Offered To General Public On 2008 Vehicles
NEW YORK — General Motors Corp. said Tuesday it will extend employee discounts to everyone on almost all of its 2008 and some of its 2009 models as it seeks to clear its remaining inventory of 2008 vehicles.
The Detroit automaker said it will offer employee prices on all 2008 vehicles except its medium-duty trucks. It will also extend the incentive on a handful of 2009 models.
Employee discounts generally are 10 percent below the invoice price but vary by model.
The discount comes at a time when GM, the largest U.S. automaker, is struggling to boost its declining sales amid a weak economy and a rapid shift in demand away from its traditionally popular trucks and SUVs. GM's U.S. sales fell 26 percent in July and are down 18 percent year to date, through it was still the top-selling automaker in the U.S. in both categories.
Shares of the company fell 41 cents, or 4 percent, to $9.95 Tuesday.
GM has offered limited employee pricing in the past, but Tuesday's announcement is the first time since 2005 the automaker extended the incentive to all buyers. The sale was wildly successful then, boosting its June U.S. sales 41 percent, July sales 19 percent and prompting both Ford Motor Co. and then-DaimlerChrysler AG's Chrysler Group to unveil their own employee-pricing plans.
"It was obviously very successful last time around," GM spokesman John McDonald said in an interview, but he added that the auto market is much weaker this year and the program may be less effective.
"I don't think everyone will have the expectation that it will achieve those kind of levels because the market is very different now," he said.
The 2009 models included in the sale are the Chevrolet Cobalt and HHR, the Pontiac Vibe and G5 and the Cadillac CTS, GM said. The offer runs from Aug. 20 to Sept. 2.
Erich Merkle, an auto analyst with Crowe Chizek and Co., said he was unconvinced the incentives would lift August sales figures very much because the economy remains so weak and consumers' priorities remain elsewhere.
"It's a pretty short timeframe, so I'm not expecting it to have a big impact, but they're trying like everyone else ... to clear the 08s off the lot," he said. It's been difficult given the sales environment right now."
Merkle also said consumers have been bombarded with numerous incentives from automakers recently, and their effectiveness may be wearing thin.
"Consumer confidence is incredibly low right now," he said. "But also because of higher gas prices and because the labor market is not as strong as it was 3 years ago ... there's not a lot of dry powder left."
GM most recently extended its employee pricing program for several days at the end of July to friends and family of GM employees.
Some of the 2009 models included in this sale, such as the Cobalt, are smaller, more fuel efficient cars that actually saw sales rise in July. Cobalt U.S. sales jumped 3.5 percent, while Cadillac CTS sales rose 38 percent.
Although GM's current inventory is disproportionately represented by larger trucks and SUVs, which have borne the brunt of the sales decline, McDonald said the company extended the sale to the more fuel-efficient models because GM was eager to introduce them to consumers.
"Those four vehicles in specific are great, high-mileage vehicles," he said.
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DAN STRUMPF | August 19, 2008 05:31 PM EST |
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