General Motors said yesterday that it plans to lessen its emphasis on incentives over time, relying instead on the price of the car to represent greater value.
The disclosure came during the company’s annual shareholder meeting in which CEO Rick Wagoner laid out a four-step plan to rejuvenate its flagging North American business. (For the full story see today’s PROMO Xtra or visit Promomagazine.com).
“It means strong product offerings at compelling prices that represent great value,” Wagoner said.
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| Rick Wagoner |
The automaker has long relied on incentives to drive revenue. In its most recent move to motivate automobile buyers, General Motors hopes that consumers will want to take advantage of someone else’s employee discount, especially if it’s on a big-ticket item like an automobile.
The automaker is passing its employee discount on to the general public until July 5 in its promotion, Employee Discount for Everyone. GM uses a formula, based on the price of the vehicle, to decide the employee discount.
The promotion comes at a difficult time for the struggling automaker, which also said yesterday at the shareholder’s meeting that 25,000 jobs would be eliminated over the next few years by closing some plants in the U.S. and Germany. With the cuts, the automaker expects to save $2.5 billion annually.
Consumers will find discount prices displayed on eligible vehicles in the promotion that also take into account available rebates, but exclude taxes, title and dealer fees. Consumers can also confirm the price of a specific vehicle by entering the vehicle’s VIN number at www.gmbuypower.com, or use the site to search for discounts by location.
The program includes all 2005 GM cars and trucks, except for Chevrolet Corvette and GMC medium-duty trucks, and is compatible with most other incentives currently available. Broadcast, print, in-store and online media that feature GM employees support.
GM spokesperson Deborah Silverman said this the first time GM has used its employee discount as an incentive for the general public to purchase a vehicle.
“This program has been in the works for a while, and like most of our programs, we knew it would take a while before we would implement it,” Silverman said.
The program follows round two of GM’s Hot Button promotion, which was designed to lure consumers into GM show rooms with a $1,000 cash bonus and educate them about its OnStar safety and security features. The program ran in April and May.
Yesterday, Wagoner called GM’s first-quarter performance “poor,” adding that it is not solely because of its sales strategies. GM reported a first-quarter loss of $1.3 billion. Though GM sold more lower-profit cars and fewer higher-profit SUVs, Wagoner attributes most of the company’s financial woes to rising healthcare costs.
“Our $1,500 per unit health care expense represents a significant disadvantage versus our foreign-based competitors,” Wagoner said in a statement. “Left unaddressed, this will make a big difference in our ability to compete in investment, technology, and other key contributors to our future success.”
Last month, GM and fellow Big-Three automaker Ford’s debt was downgraded to below investment grade, or junk status, by investment firm Standard & Poor’s Rating Services, causing their respective stocks to tumble.
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