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GM Augments Weak January Sales With New Deals
By Lauren Woods
General Motors Corp. is expected to deliver a ramped-up incentive program to amplify its sales in the forthcoming months. January was not a good month for the automaker however; it is working on increasing its sales by delivering new deals that include zero-percent loans and cash.
The incentive program of the largest automaker will revive free financing and at the same time bonus cash. The zero-percent financing will run for as long as 60 months. In addition, the $500 bonus will be available on most 2006 and 2007 GM models. These strategies were considered by GM to augment its January sales, which have declined by about 17 percent.
Bonus cash will be offered by the automaker in the Midwest and Northeast. On the other hand, the zero-percent financing will be available anywhere in the United States. "It's a new thing that kind of caught us off guard," said dealer John Rogan of John Rogan Buick-Livonia. "It's a great deal. And, as dealers, we believe it will drive our market share up."
GM January sales decline is significantly caused by the intended reduction in rental fleet sales. It is also caused by a slump in consumer demand. After sharp sales decline last month, some critics question whether the automaker pulled back too distant on incentives. "We're not going to go down the path we went down before, throwing incentive dollar after incentive dollar," GM senior analyst Paul Ballew said after announcing January sales figures early this month. "But we'll do what it takes to be competitive."
John McDonald, GM spokesman, said the new incentives, which will expire on Feb. 20, do not reflect a reversal of GM's strategy to cut back on deals and discounts, but are a bid to keep customers coming into showrooms during a traditionally slow sales month. "The strategy is the same," he added. "We had planned to do this prior to the January results."
Since 2002, the incentives of the automaker in January were at their lowest – at an average of $2,365. The figure is lower than DaimlerChrysler AG's Chrysler Group at $3,853 and Ford Motor Co. at $3,502.
The new incentives imposed by GM will exclude brands like Cadillac, Hummer and Saab. It will also exclude selected models like the Chevrolet Corvette Z06 and medium-duty trucks. Free financing, consequently, will be available for three or five years depending on the vehicle. It will be available only for Chevrolet Silverado and GMC Sierra pickups. McDonald added, "Advertising will be done on a regional level and by the individual brands."
"GM was smart to avoid a major national blitz, which would have created the impression that the automaker was going back on its less-is-better strategy on incentives," said Tom Libby, an analyst with J.D. Power and Associates' Power Information Network. He added, "Even though GM lost some sales, the company is right to keep its discounts low, since deep discounts erode brand values and drive down resale values. It sounds like a significant program. But it's not a humungous, pull-out-all-the-stops program. If it is, they would be getting away from their strategy."
GM, founded in 1908, has global headquarters at the Renaissance Center in Detroit, Michigan, USA. It is famed in the manufacture of remarkable vehicles that served as milestones in the automotive timeline. GM manufactures cars and trucks in 33 countries. These vehicles have established a reputation for quality in the field. This is because GM parts and accessories like rotors, brakes, filters, AEM cold air intake as well as other auto systems used in the vehicles are precision engineered to serve their purpose well.
About the Author
Given her background on cars as an auto insurance director, Lauren Woods finds the world of cars to be constantly changing. You can visit AEM cold air intake for more information.
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