Chrysler, Ford Jump on Employee Pricing Promos

For the Big Three automakers, it’s monkey see, monkey do with employee incentives pricing promotions. The Chrysler Group and Ford Motor Co. both launched their own versions of “employee discount” sales incentives this month in hopes to catch some of General Motors’ lightning in a bottle.

GM was the first to offer its employee discount to the public and has extended the “Employee Discounts For Everyone” program through Aug. 1. As a result, it saw its best sales month in 19 years, however, analysts are not sure what the long-term impact of the deep discount strategy will be.

“We don’t know how much demand was pulled forward and what impact this sale will have on residual values, brand equity and the 2006 model year launch, where prices may be perceived to be substantially higher,” Morgan Stanley analyst Stephen Girsky said in a memo to clients last week. “The longer these programs last, the less successful they will be.”

GM said its dealers sold 558,092 new cars and trucks in June, a 41% increase over the prior year and its best month since September 1986. That included a reported 382,601 trucks, which it said was an industry all-time record.

Ford’s Ford, Lincoln and Mercury brands are offering the “Ford Family Plan”, which launched July 6 and runs through Aug 1. The offer includes an employee discount as well as cash back. Excluded from the plan are Ford trucks larger than F-350 and E-350, the Ford Mustang, Ford GT and Ford Escape Hybrid. Print, TV, radio and Internet support.

Ads and dealer materials feature the Ford Family Plan Welcome mat with the words “Welcome Ford Family Plan” or “Welcome Lincoln Mercury Family Plan.”

Chrysler Group’s Employee Pricing Plus program is running simultaneously with Ford’s and GM’s, and offers consumers the employee discount and up to an additional $3,500 cash back. Vehicles excluded from the program include the 2005 Chrysler 300, Dodge Magnum, all 2006 models, Dodge Sprinter van, Dodge Viper, Jeep Liberty Diesel and all SRT models.

Girsky and other analysts have compared the “employee discount” promotions to the post-9/11 0% financing programs, which caused a consumer buzz and created a temporary fix for the auto industry, but resulted in sluggish sales thereafter.

While employee discount pricing is new to the automotive industry, it is fairly common in retail, where many retailers hold “friends and family” sales that invite loyalty program members to shop during a specific time frame and use a coupon to receive an employee discount.