Automotive News [sub] reports that GM’s Zen Master/Product Guru Mark LaNeve is turning his back on ye olde (2006) “market pricing.” You know, where the sticker price reflects the actual selling price. Or thereabouts. “In terms of a pure strategy where we price right to market and have no incentive spending — we have very few vehicles where we’d do that. We’ll have some level of incentive spending almost across the board.” After that… I’m confused. Why has GM increased ’09 product prices by 2.7 percent (roughly $790)? And what’s this mean? “LaNeve said GM prefers to spend incentive money for competitive reasons — not to reduce inventory, as it has been doing, because the latter is ‘wasted money.’ “We continue to want to price our vehicles to the market. We’d like to see incentive spending wane once we get our inventories adjusted. I think it smoothes out after the first quarter. We’re hardly building anything in the first quarter.” So, Uncle Sugar’s paying GM not to build cars, so they can eventually offer incentives to steal market share from carmakers who aren’t being paid not to build cars? Sweet.
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We pay enough people not to work, why not pay industries not to produce things?
Honestly, this country is done.
Don’t post this stuff so early in the day…..it makes me dizzy and nauseous.
Oh for ___ sakes, they ARE making this up as they go. Scary.
U-S-A! U-S-A! U-S-A!
But hey, they are protecting thousands of jobs, so that makes it worth it, right?
Here in Canada, Acura has had a $11,500 discount on MDX’s for the past month, that’s a 20% incentive (say goodbye to resale value).
So if Toyota and Honda have to pile on incentives to sell cars, I’m not sure why anyone would be surprised that GM also has to.
Just pile on the craziness.
Last month I expect GM were trying to generate cash flow from the unsold inventory, even if incentives (losses per product) were used, they needed that cash.
Maybe it’s only 2009 inventory now?
Do these people even speak English and have coherent thoughts?
It’s no wonder that the Medium 2.8 are in such trouble.
@cwallace
U-S-S-A! U-S-S-A! U-S-S-A!
ca36gtp
“We pay enough people not to work, why not pay industries not to produce things?
Honestly, this country is done.”
Just wait till next month.
The government is going to start a gasoline fire and demonstrate how to extinguish it with more gasoline!
Simply, incentives can be adjusted according to need. While sticker price changes are permanent. What’s so hard to understand about that?
And anyway, the anointed one will be in power tomorrow (ascension Tuesday) to take his rightful position. All our worries are over.
If memory serves, a price increase on new production allows the manufacturer to grow the “top line” via higher sales (to dealers, which are floorplanned). The manufacturer then increases sales incentives (sales expense increases).
Many years ago, I observed this odd phenomena while working in another industry. Sales incentives arrived on the same day as new production prices were increased….
Perhaps the accountants might weigh in?
I think that the backlash of anti GM and Chrysler sentiment over these bailouts is going to make it impossible for GM or Chryco to sell a car at any price in the future. I know I wouldn’t consider a car from either of these perpetually mismanaged companies. Their car could be 5K less than another with 10 year 0% financing, and I STILL wouldn’t purchase one.
The fact that Obama is going to keep throwing away our tax dollars on these two losers is even more incentive to NEVER buy a product from either one, because it will just perpetuate their guaranteed demise in the long run, and cost the taxpayers even more money.
“Alexander Tyler’s Principle. “A democracy will continue to exist up until the time that voters discover they can vote themselves generous gifts from the public treasury. From that moment on, the majority always vote for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship.””
so the answer to the question “How much is this car?”, which has NEVER been forthcoming from a dealer, is now even more muddled. Great.
revhigh,
While there may be some backlash, there also seems to be heightened concern about our long-term economic outlook that may be influencing people to buy American badges on account of the crisis. I’ve heard people remark on this (although I don’t know anyone who’s actually bought a new car, recently; many people are waiting to see how 2009 shakes out).
Apparently, these people haven’t read GM’s viability plan, which calls for reducing US/Canadian employment by 25% or more. If things go well. Toyota and Honda are more likely to increase US/Canadian employment, if they get the chance (need capacity).
revhigh@
Agreed.
Kixstart@: I’m coming around to the idea of buying a Ford next time around because of the need to support domestic businesses and Ford at least seem to “get it” and are not only bringing products, but fixing their overall portfolio to right size the company. That and the potential of a 355hp/AWD Taurus SHO has definately piqued my interest.
As to revhigh’s point, I will never, ever look at buying a GM car again as a result of management/UAW running the company into the ground and the government’s aimless attempts to prop it up.
Translation:
“We have the murdering Parasites-on-the-Potomac stealing from you all for us so we can now raise our prices…FDR and Keynes is Back!”
Aint Public/Private Partnership Fascism Great?
If you value individual freedom and do not want to live like a runt slave of the state then it is important NOT to purchase 2.801 products.
so the answer to the question “How much is this car?”, which has NEVER been forthcoming from a dealer, is now even more muddled. Great.
That’s always been the point. ‘Value Pricing’ was largely put in place to make it very hard for the average consumer to figure out how much a car costs. Of course, internet pricing resources utterly negate this tactic, but not all buyers are savvy enough to use them, which is ok, because a lot of car dealers (and GM itself) still run their businesses like it’s 1962.
Side note: I first learned of TTAC from a quote of Robert’s on this very topic that was reprinted in Phil Edmonston’s Lemon-Aid.
I have no insight on whether John Q Public will boycott GM and/or Chrysler because of the bailout. That sentiment will probably come from those who do or want to avoid doing business with them for other reasons.
I would tend to doubt many would boycott as price is paramount to most of GM/Chrysler customers. So even if they had principles, another incentive could cure that.
As an owner of a Buick Pontiac GMC franchise, I am completely opposed to the bailouts!!!
Infact, I can honestly say that I would never buy a new GM vehicle! Can we say depreciation?!?
I hate to admit this, but I recently convinced my brother and best friend to buy Honda’s instead.
Time for this guy to bailout, without “a bailout” of coarse!
Dr. XO:
Depreciation is the one area where perception of the Detroit 3 meets reality. As has been mentioned here on TTAC, your Pontiac G8 has catastrophic deprecation. Its the one “concern” I would have looking at the new Taurus. Ford could address this to some extent by making a “fleet” version of the car with plainer sheet metal and front/rear details along with an LTD or Police Interceptor badge.
I don’t believe most GM and Chrysler buyers understand the risk of massive depreciation they run. They simply look at the monthly payment and determine whether they can afford to buy or not.
I know that ‘monthly payment’ perspective isn’t limited to just these 2 dead companies walking, but you really have to have tunnel vision mixed with OCD to ignore the broader picture of Chry and GM products and companies.
@ jkross22 :
“I don’t believe most GM and Chrysler buyers understand the risk of massive depreciation they run. They simply look at the monthly payment and determine whether they can afford to buy or not.”
I’m not so sure about that. Many GM’s potential customers are currently upside down on their loan. As a result, they may actually learn to look at residuals and not financing 120% of the value of the car in the future.
He is saying that if they stop building cars right now, that the oversupply will evaporate in the next few months as people snatch up that excess inventory. Then they will not have to lower the price on their cars after all.
He is assuming, of course, that anybody does buy their oversupply in the next few months.
More chilling is his assumption that he does not have to reduce prices right now to reduce the oversupply. Why not? Because they do not need to rely on car sales to make money. Instead, money is handed to them directly for free from the taxpayers by our congress and administrations.
So he figures he can sit this one out.
In other words, the assumption by the car companies is that the US taxpayer, abetted by the gov, is artifically propping up car prices, prices that otherwise would have to settle into their own market position.
Thus do we pay money for a GM car, pay the government, who pays GM to keep the price of the car up so that we pay higher than market.
We do this so we can prop up the jobs of those who earn higher than market.
If things were this simple in the Soviet Union everybody would be rich, and everyone in Havana would be driving Ferraris.
Thanks for the translations guys.
My “BS-transform-O-matic” took one pass and smoked a circuit board.
@ronin-“If things were this simple in the Soviet Union everybody would be rich, and everyone in Havana would be driving Ferraris.”
If you get a chance try to get this through to the new POTUS and the PolitBuro.
I think they may be hazy on a few points.
I sure hope this silliness does end up wrecking Ford just as they were getting it. Dang.
Bunter
If we don’t buy the Little 3 products they will soon go out of business.
This is the best thing they could do for the country.
Alexander Tytler.
All I can say is that because of existing incentives I’m now a proud owner of an Impala SS. Figured it’d be a good time to buy something with balls before Uncle Stalin err I mean Sam takes that right from me.
What a funny coincidence:
Last week I responded to an article about GM by saying “if I were to win a brand new GM on The Price is Right I would of course be glad to take it and immediately put it up for sale on Ebay.”
I was raised in a loyal GM family and my first three cars were of that lineage but way back in the mid 80’s all of us soured on GM and have not and will not ever buy another of their products.
Both Honda and Toyota have given such a tiny number of problems that they’ve been our brands for decades.
jkross22 :
“I don’t believe most GM and Chrysler buyers understand the risk of massive depreciation they run. They simply look at the monthly payment and determine whether they can afford to buy or not.”
There is always a selling price. People should have learned about being upside down by now – but they didn’t.
It’s the perfect storm on poor car sales. 1. People don’t need a new car 2. The big 2.5 don’t have anything you want and/or they might go under and as for other non American choices see #1.
What if the big 2.5 stoped building crap and only built the cars that do sell and what ever new they have planned? Pay the workers not to build anything in the mean time as you ramp up the new stuff(Heck we payed farmer not to grow crops when the 3rd world was starving) Then when you have decent cars go back into business. JUst saying if you’re going to piss away the money anyway..
jkross wrote:
I don’t believe most GM and Chrysler buyers understand the risk of massive depreciation they run. They simply look at the monthly payment and determine whether they can afford to buy or not.
Aint that the truth … people who currently own recent GM OR Chryco products will most likely be upside down the ENTIRE length of their loans (probably another 3-5 years for most). This will preclude even those who ‘might’ buy another car from the two losers not to be able to. Certainly (almost) no import buyer will ever consider GM or Chryco, so that leaves current GM and Chryco owners, who aren’t upside down, who have good credit, and who ‘need’ AND are capable of buying a new car as the only audience that GM and Chryco have. Pretty damn slim pickin’s as far as targeted buyers go, if you ask me.
GM and Chryco and the UAW need to go away and stop raping the American public for their 30 years of incompetent management that they now expect the American public to pay for.
I have no problem with Ford, who seems to get it and produces a decent automobile. If I were Ford or Toyota or Honda or any of the companies NOT suckling at the public teat, I woud be FURIOUS at the unfair trade practices they have to contend with trying to sell cars against the US Govt.
My question is … who’s going to be the first company to be told by the Govt to go **** off, we’re not bailing you out ? I can’t wait for that to happen.