GM details value-pricing plan
GM formally announced today the price cuts we reported on last week. In a flashy press conference at the Detroit Auto Show today, GM North America VP Vehicle Sales, Service and Marketing Mark LaNeve announced GM will cut sticker prices on every Chevrolet, Buick and GMC model, as well as most Pontiac cars and trucks.
The price cuts go into effect January 11. Highlighting the across the board nature of the pricing program, Chevy General Manager Ed Peper (pictured above) announced that the brand new Chevy Tahoe, which hits showrooms today, would be priced about $2,000 below its predecessor.
The intent of the program is to break the vicious circle of cash rebates, discounts and incentives that have warped customers' car buying expectations over the past few years.
All told, 80 percent of GM's vehicles will be affected by the price changes. Saab, Hummer and Saturn are not part of the program.
GM CEO Rick Wagoner indicated that the company wasn't going cold turkey - dealer incentives will still exist (although he declined to offer specifics).
Reader Comments (Page 1 of 1)
330R 4:11PM (1/10/2006)
These will last until spring. Ugh.
Seriously, it's a good move for GM to wean themselves and their customers off inflated MSRPs and subsequent rebates and firesales, devaluing the product and angering owners who bought at the wrong time (November '05).
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Aggie1995 4:36PM (1/10/2006)
No way that this will work unless the other "Big 3" also buy into this scheme. Too much cross-shopping that goes on between Ford/Chevy/Chrysler. To some extent Toyota has been getting into the incentive game on their trucks also.
The big incentives also helped dealers cover up negative equity on a trade-in.
GM was advertising the base model Tahoe LS for $27.XXX during the Red Tag Event and now the MSRP for the new one is $34k. I sure hope there is $6,000+ of variance between the MSRP and invoice on this vehicle. Uh..ooh.!
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Christian 4:40PM (1/10/2006)
Hah. "We are going bankrupt, but at least we're beating Ford in sales, by undercutting Kia prices."
Never mind you aren't making any money on cars, GM.
Why not just call it a "Going Out of Business Sale"? Product will be sure to move. -C
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hanmojo 4:44PM (1/10/2006)
don't see what's the big deal. Nobody (i hope) pay MSRP, all american made car can be negotiate from invoice + a few hundred. For new model just wait a few months.
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Source1 5:35PM (1/10/2006)
I can buy a fully loaded Pilot, which I own, for 31k loaded with leather, rear entertainment and sunroof. Why would I buy a Tahoe for 40k? I don't get it
And btw my Pilot seats EIGHT comfortably. I am buying another one this week.
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md 6:40PM (1/10/2006)
The Tahoe has many adnvantages over a Pilot, if you really need them. The Tahoe will be able to tow and a haul much heavier loads than the Pilot, it has 4wd with low range if you need it, and most importantly, it is a trusted, dependable, and proven design. A minivan chasis can only be stretched so far for a vehicle designed to take a lot of physical abuse over the years.
If you really need a large SUV, the current Tahoe is a strong contender in its segment, and with the signifant mileage gains and updated interior, it will easily be class-leading.
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William Wilson 6:40PM (1/10/2006)
When you buy a car that cost $18,000.00 and 3 years later it's only worth $6,000 not many can trade very often and thats even with low miles. Most people are tired of losing their shirt every time they trade so they trade alot less than they did a one time.
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Steve 6:44PM (1/10/2006)
Mr Obvious says...Tahoe bigger than Pilot
You and your wife and six 4 year olds enjoy your Pilot.
When you compare cars...try to get the size right...say compare the Pilot to the Enjoy.
Get it?
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iQuack 6:44PM (1/10/2006)
Best to stop the stupid overpricing, classless couponing and heavy discounting that makes the company look tawdry.
As a practical matter, buyers will be paying what they're paying already without as much annoying haggling. The final buying price will be the same.
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bernie 6:50PM (1/10/2006)
It's not bad enough to torpedo the profitability of an industry with all the "you pay what I pay" red tag shenanigans from 2005. Now GM wants to defocate on the North American Auto Show with their "Our Cars have never been worth less" mea culpa swan dive. Let's pick our nose at the punch bowl and take all our competitors into the sewage with us. Going out of Business sale is right, Christian. And good riddance to them, the bums.
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JIm 7:11PM (1/10/2006)
Say what you will about the American consumer, but when push comes to shove, that consumer will opt for value every time. None of the mfgrs want rebates, give backs, red tag sales, etc. The customer precieves value in these programs - real or imagined - and unless the customer preceives he or she is getting a good value, GM will not get their dollars, regardless of how GM want to couch these new retail prices, be it value pricing or some other name.
Lowering the price vs. the precieved value of a rebate (never mind the prices may be identical in the end), will not get that customer in the show room to make a purchase if the value is not there. Some of the posts above mine have made that perfectly clear.
If GM has guessed incorrectly they will be forced to once again give rebates on top of their now lower prices in order to get that customer in the show room.
Personally I don't believe this new value pricing will work. We will all see very quickly.
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Paul 7:44PM (1/10/2006)
Good Luck GM. You have dug yourselves such a deep hole over the last few decades I really question if there is anything you can do to avoid Bankruptcy. Getting away from rebates will be very very difficult. Your last go around with lower prices just a couple of months ago failed badly. You would rather fight with your customers than try to work legitimate problems out. Question, Why does your Corvette still only get a 3 year 36,000 mile new car warranty when your new Cobalt gets so much more. Wake uo GM, you are in deep deep trouble.
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roadside observer 11:27PM (1/10/2006)
GM is on the right track by cutting sticker prices instead of offering fat incentives. The buying public is not going to respond to this right away, however. It's going to take time. Like Jim said, the consumer has to perceive value for this to work. With solid marketing over the next three months, this plan could well pay off when the spring selling season kicks in.
HOWEVER ...
We all know that the old ways die a very hard death in Detroit. It remains to be seen if GM has the fortitude to stay the course with this plan. Will GM stay with it if sales initially slide and even if the dealer body starts yelling for a return to big rebates? We shall soon find out ... and what we learn will tell us a lot about whether or not Rick and Co. have the mettle to do the difficult things GM needs.
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Aggie1995 9:48AM (1/11/2006)
The value Proposition at GM,
I agree that if GM can offer a better value in their vehicles that people will buy them with or without rebates. But lets look at the new Tahoe vs. Expedition. Unless you are a brand die-hard you would probably consider both of these vehicles equals in terms of functionality and content. (I realize there are some minor differences that mean the world to a few people). The question that comes to my mind is does this new Tahoe with lower MSRP pricing present a better value proposition than the Ford Expy with rebates? If not then rebates are inevitable to come back for GM. If the value is there then this new pricing scheme has a chance of working.
It would be a great commercial to say "Introducing the new 2007 Tahoe priced thousands less than the competitions' old models."
But what do I know, I am just an armchair quarterback.
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lalaland 12:05PM (1/11/2006)
You think consumers are going to forget incentives just like that? Forget it! All GM has done has given itself a new price ceiling, and the incentives will follow soon enough, like Aggie1995 (#2) said, with the customers needing cash to get out from under their upside-down trade-ins.
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