GM Re-Introduces Employee Pricing for Everyone
By Chris Haak
Beginning tomorrow, August 20, 2008, GM will roll out employee pricing for everyone in an effort to clear inventories of remaining 2008 model year vehicles. According to GM’s press release, the only 2008 model year vehicles excluded are medium duty trucks. The employee discounts are also extended to a handful of 2009 model year vehicles, including the Cadillac CTS, Chevrolet Cobalt and HHR, Pontiac Vibe and G5.
GM isn’t making it as easy on customers as it potentially could have, because they are not releasing the details of employee prices to online shopping sites such as Edmunds or TrueDelta, but instead ask that customers visit their local GM dealer to inquire about pricing. Update 8/20/2008: GM has put up a website giving the employee price (without options) for all of the eligible models. The site can be visited here. Note that there appear to be at least a handful of errors on that site at the moment (such as a $23,435 2009 Chevrolet Cobalt SS appearing with an employee price of $14,554.15, when it should actually be just over $20,000), but it can be a helpful tool for ballparking the price of your new car.
Of course, the last time GM rolled out employee pricing for everyone in summer 2005, the promotion was an immediate success, with sales leaping by double-digit percentages. The problem last time, though, was that not only did Chrysler and Ford quickly match the deal, but all three continually extended the promotion into the fall, at which point its impact was blunted and the impact on sales slowed dramatically. The steep discounts in the summer months also pulled ahead purchases that buyers otherwise might have done later in the year, harming late-year sales results. Finally, dramatically lowering the price of new vehicles caused instant harm to residual values of used cars. Some of this residual value fallout from 2005 is likely partially to blame for the huge lease losses incurred by Chrysler, Ford, and GM and their captive finance companies over the past few months.
The other issue with employee pricing – and generally piling on rebates, incentives, subsidized financing, etc. – is that it conveys a message to consumers that either your product is overpriced, or that they should wait for a deal before buying. Does GM want to sell vehicles on their own merits, or on the strength of the deal? In a perfect world, GM’s ongoing product revitalization would drive sales sufficiently so that incentives are not required. That’s part of the reason I am surprised to see the employee pricing promotion extended not only to some of the company’s recent sales successes (the 2008 Malibu and CTS) but even the 2009 Cadillac CTS. Not that I’m complaining, though, because it’s probably one of the best buyer’s markets we’ve seen in years (as long as you’re not a leasing customer and have great credit).
If GM can manage to discipline itself well enough to stop this promotion before they have shot themselves in the foot like they did in 2005, it might be the short-term sales bump that they need. Clearly, sales to date in August must have not been pretty for the company to announce this mid-month. (The press release, linked here, of course contains fluff about holding the sale to celebrate the company’s 100th anniversary, and nothing about slow August sales).
Update 8/22/08: Michael Karesh, owner of TrueDelta, noted in the comments below that he has loaded the GM employee prices into his excellent pricing and reliability website.
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