Showroom at a GM dealership
One week after vowing to reduce costly and profit-sapping incentives, General Motors of Canada Ltd. is boosting its discounts and rebates with employee pricing for all customers.
The employee pricing program, which has been offered by GM and other auto makers in Canada in past incentive wars, will be offered until Aug. 31, and GM will be joined by Ford Motor Co. of Canada Ltd.
The move comes amid sluggish sales in the Canadian vehicle market - up less than 1 per cent last month from a weak May, 2009 - and a poor year in particular for GM, whose sales have slumped 12 per cent this year.
It also comes after new GM president Kevin Williams told reporters last week that "we don't want to play the incentive game. The new General Motors is not going to play it the way we've played it in the past."
Employee pricing is consistent with that outlook, GM spokesman Tony LaRocca insisted Thursday, saying the new incentives on such vehicles as the Chevrolet Equinox and GMC Terrain crossover utility vehicles are considerably lower than rebates and other programs GM placed on them in the past.
The new program also meets GM's goal of boosting sales profitably, Mr. LaRocca said.
However, "the discounts are huge," remarked one dealer who insisted on anonymity because memos from GM's head office in Oshawa, Ont., on incentive programs are confidential.
The memo explaining the program to dealers outlines the price reduction on a 2010 Chevrolet Silverado LTZ Crew Cab 4x4 pickup. The manufacturers suggested retail price before the employee pricing discount is $49,175, including options, an air conditioning tax and a $1,350 freight charge. With the employee discount, the price falls to $37,912.
This is the time of year when auto makers are using such programs to reduce inventories of previous model year vehicles before the new model year starts, Mr. LaRocca added.
Mr. Williams said last week that GM is meeting its market share targets and hopes to boost its market share from the current level of about 15.5 per cent to above 16 per cent or 17 per cent by the end of the year.
He added that the amount of incentive money in the market from all manufacturers was not sustainable.
"We really don't believe that we see competitors that are able to put this kind of incentive in the marketplace sustained throughout this year and still have a semblance of a profitable business," he said.
Ford will begin offering an employee pricing program next month that will last until Aug. 31, president David Mondragon said.
"We will always remain competitive in the marketplace," Mr. Mondragon said, "but don't look to Ford to be the incentive leader."
Chrysler Canada Inc. has no plans to offer employee pricing "at this time," president Reid Bigland said.
Dodge Ram sales are up 71 per cent this year and it has gained five points of market share, Mr. Bigland said, so there's no need boost incentives.
Incentives are highest in the full-sized pickup truck market, where this month GM has been offering cash rebates of $9,000 on a Silverado 1500 Crew Cab version, compared with $8,250 on a Ram SLT, $7,000 on a Ford F-150 and $3,500 on a Toyota Tundra, according to an analysis of pickup incentives by one auto maker.
That's just "three worthy competitors slugging it out in a huge and growing segment," Mr. Bigland said.
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WHAT'S ON SALE
General Motors is offering "employee pricing" discounts across its brands...
Chevrolet
Pontiac
Buick
GMC
Cadillac
Hummer
...except on these models
Chevrolet Corvette ZR1
Chevrolet Express
GMC Savanna
Medium Duty Trucks
Chevrolet Equinox
Chevrolet Camaro
GMC Terrain
Buick Regal
Buick LaCrosse
Cadillac SRX and CTS Coupe
One advertised example:
GMC Acadia SLE
Source: GM