Well, we’ve already been warned that GM’s 4Q cash burn and financial results will be worse than the just-released 3Q results; now we have another reason why. Even though GM has been averaging just over $4,000 per vehicle in incentives, a traditional Red-Toe-Tag sale has been planned for year’s end, reports Automotive News [sub]. As in years past, the answer lies in shoddy inventory management. GM’s Susan Docherty explains:
All of our efforts will be to sell down our remaining 2009 inventory. We’ll have a little bit of carryover of that into the first quarter of 2010, but the objective is to keep our inventory somewhere between 425,000 to 450,000 units. I’d rather have very slow, incremental movement up [in market share] than the peaks and valleys we saw all over 2008 and of course in the first six months of the 2009 calendar year
Wait, there were peaks to go along with all the valleys in 2009? More to the point, how does Docherty’s desire for organic growth square with the decision to spike sales at year’s end with as-yet non-specific financing and cash incentives? The real irony is that GM is having an easier than expected time moving its remaining 10,000 Pontiacs and 8,000 Saturns; The Red Tag event is for Chevrolet, Buick-GMC gets the “Holiday Event” and Cadillac will hold a “Seasons Best” sale. Non-stop incentives on “core brands,” goes against much of the “sell the product, not the deal” rhetoric coming out of GM post-bankruptcy. And unless holiday sales blow up, the profit-sapping incentives will help justify GM’s 4Q loss warnings. The turnaround still has yet to show itself.
here I thought I’d heard that LaNeve had left the building?
same thing = same results.
and we lost how much money last quarter?
it’s time we get some new people, this is really stupid.
In my neck of the woods, the local Saturn dealer ran the Saturn ad from earlier this year (you know, the one where the Saturn salesman sits there and talks about what great cars Saturn offers these days). Talk about cognitive dissonance.
Susan, dear, those aren’t peaks. You have the sales graph upside down.
Well, she probably meant peaks in inventory.
Does this mean I can get a $hitveo or $hitbalt for $1? If so it’s still too much.
The general auto press and MSM will look at the sales (if they occur) and chorus “Turnaround!”, just like they did in late 2007.
Clearly this demonstrates GM immense confidence in it’s new products.
Same old…
Bunter
My local GM dealer is still offering good deals on 2007 and 2008 models.
once again dealers will receive Red Tags to place in cars covered in snow to the point that no one can see them anyway. meanwhile, frustrated dealers have to exist under fixed pricing that takes away negotiating ability and diminishes or eliminates any possibility of profit.
there has to be a better way…oh wait, there is, it’s called Return to Greatness. the same plan Wagoner refused to let me pass out at the shareholders’ meeting.
see the first twenty steps here…http://www.generalwatch.com/editorials/editorial.cfm?EdID=2
Why bash GM for something you will see every manufacture do in the coming months?
GM dishes out the incentives so much that “Sale” is really an oxymoron for them
I know everything is relative, but isn’t there something slightly odd about having over 400,000 (four HUNDRED THOUSAND) vehicles as inventory???
How will this compare to Toyota and Ford I wonder?
Good question. I wonder how much inventory everyone carries.