GM to End Its Employee-Discount Incentive

<div class='quotetop'>QUOTE(ScottY\";p=\"110743)</div>

I'd say good ridance! From what I saw of the advertised MSRP and employee prices the big reduction was on their BIG vehicles. The reduction on the smaller cars was probably less than could be obtained by negotiating the MSRP down.

 

well i was wrong... guess you can give em away

 

I was researching the Prius and found this site. Hello everyone.

The reason behind the GM program and the results may be more complex than some may think.

Benefit 1. You sell a huge amount of inventory which allows you to build another huge amount of inventory. GM makes their money when the vehicle is shipped to the dealer.

Benefit 2. Beside getting loyal GM buyers you also penetrate the competitions market, especially by being the first to offer the program. Lot's of Toyota's, Honda's, and Nissan owners took advantage of the pricing. Bottom line, you pick up market share.

Benefit 3. The more vehicles you sell the more of, "Keeping up with the Jones" takes place. When the neighbor drives a Tahoe there's a better chance of me/you buying a Tahoe.

As far as buying one cheaper by negotiating a non-employee price. I have been at a Chevy store the last 9 years and this is the lowest price I have ever seen. The discount is small on the cheaper stuff because the markup is low on the cheap stuff. There is not much negotiating room on the less expensive vehicle because there’s not much to negotiate with.

I'm not looking for a fight. I like the Prius and every other Hybrid or EV and any manufacture pursing either one but...As far as "And after a few more recalls, they won't be buying another GM car at all. " I must defend GM a little by posting this factoid. The worst vehicle GM produces, according to consumers, is the Pontiac Vibe which is assembled by Toyota with many Toyota parts.

First post bomb, I'm running for cover. Seriously, I wish GM would get it in gear, more like Toyota and Honda and build a real Hybrid and another real EV like the EV1 from the late nineties.

 

GM needed to dump inventory because supposedly they got something like ~80 weeks of it stretching all the way back to the material suppliers.

That's something like over a year of metal and finished parts just waiting to be used, which explains them idling factories now. Imagine all the rusting, and settling before it's even used and/or assembled into a vehicle.

OTOH, Toyota supposedly has something like ~16? hours of inventory in their supply chain.

 

Not 80 weeks anymore. My store is in the top 100 with Chevrolet and we hardly have any 2005's left because of the Employee program and we certainly aren't alone. A 41% increase in sales for June over June 04. Toyota was up 14%. I expect to see another huge upswing, not 41% again, but big in July's numbers.

It does nothing to help the bottom line in the short term but the long term could see big benefits.

 

I wonder what your source for that information is.

According to the April 2005 edition of Consumer Reports, The Pontiac Vibe's predicted reliability is better than average. The 03 model's individual components and systems all rated much better than average with the exception of the electrical system and body hardware which were rated better than average and body integrity which rated average. The 04 model had all systems and components rated much better than average with the exception body hardware and body integrity which were rated better than average.

The Vibe's mechanical twin, the Toyota Matrix had similar, but slightly better ratings.

Perhaps the traditional (and rapidly dwindling in numbers) GM buyers are resistant to change.

 

Actually, I think that would be opposite. In the short term they move their chronic over-inventory, but then have to take another write-down long term.

Reminds me of the finance games that GMAC plays with their customer. You see the "0.0%" or "0.9%" in big letters, but the *true* finance cost is built into the vehicle. Usually on the popular Asian cars they expect you to pay the "real" finance costs.

I special ordered a 2000 GMC Sierra SLT 4x4, and when the sales guy priced it for financing he only knocked off around $1,500 on a $44,000 Cdn truck.

I took out my checkbook, told him I was paying for it outright, and started filling it out. He then knocked off $5,000 instead. What a scam.

 

Jay,
Was your GMC deal somehow different from the current rebate or finance incentive on a Camry, $1,000 OR 1.9% or is that a scam as well? The rebate was real, not a scam, you got it didn’t you? The rate was also real and they would have used the rebate money to buy down the interest rate. People do the same thing with home loans, it’s called “pointsâ€

 

I am old enough to remember the days that GM had more than a 50% market share in North America. It is now less than half that, not exactly achievement to be proud of.

You keep repeating the mantra that GM outsells Toyota by a three to one margin. Did you forget that these are both global companies. When you compare worldwide sales, the margin is quite a bit less and Toyota is fast gaining on GM in the race to be the largest auto maker in the world. Unless GM's executives wake up and start paying attention to its product line and customers' wishes, it may be an also run within a few years.

I drove a rented Chevy Malibu for five days, a few months ago while skiing in Colorado. It had good smooth power, handled competently and was very roomy and comfortable. However, it is one UGLY car. Doesn't GM have any decent car designers left. GM used to be the undisputed leader in automotive design. What happened? I know, the short sighted bean counters won over the car guys.

 

Like we both have said. GM's numbers are dwindling / they are losing market share and that's troubling. I blame marketing more than the vehicles. Toyota has kicked their butt for keeping up perceived value. For instance, you said the Malibu was OK to drive but was ugly. Did you know it cost less than the Camry, has more power than the Camry, gets better mileage than the Camry, is safer than the Camry and has been rated higher than the Camry the last two years? If you do then you're in the minority. Instead of Toyota worring about making a better car than the Malibu they have just out advertised Malibu.

I agree with the "looks" jab. They could do far more in that area.

 

I'm sure that is also a sales gimmick. Though I've never seen rates that low on Toyota's in Canada, unless they're very low key about advertising it.

I'm actually in Rochester MN at the moment but did look at the Toyota Canada website to confirm. They are currently offering Camry's for a 60 month finance at 3.5%, or a 48 month lease at 3.9%.

A similar term for the Echo Hatchback is 3.6% finance and 3.3% lease. A similar term for the Prius is 6.2% finance and 7.7% lease. The Tundra is 4.9%.

Toyota rarely offers rebates on vehicles in Canada. What you see on the sticker is pretty much what you pay, financing is on top.

So if the financing isn't a scam, then why did GMC knock off so much once I whipped out my checkbook and paid outright? Or is it somehow a better "deal" to finance at "0.0%" than it is to pay outright?

I don't think there is any conspiracy about why GM is having so many problems right now, not the least of which is their "junk bond" rating. They brought it onto themselves and I really hope they don't try to blame their workers or question the patriotism of the car buying public.

If GM initial quality is so good, why did the pinion seal in my 2000 Sierra go bad a week after I bought it? Or why did I go through 3 of their AutoTrak 4x4 mode select switches - a documented problem with them?

What impressed me most of all was how my Vortec 5.3 motor started knocking like a diesel and burning a bit of oil after about 3,000 miles, and GMC had the balls to suggest it was "normal." They were telling owners in Canada that 1 litre every 1,000 km (A bit more than 1 quart every 600 miles) was "acceptible" oil consumption.

Maybe some blindly loyal GM owners will believe that, I sure didn't. Then I discovered the Piston Slap site:

http://www.pistonslap.com

We had a troll here about a month ago who even tried to convince us that GM "invented" the diesel motor, and had great diesel motors in cars. I guess he tried to BS us about those converted 350 Chevy gas motors they put into cars in the early 80's.

This troll was all over the map. On the one hand he said those hard-working GM assembly line workers made great cars (I'm sure they at least try). On the other hand, he blamed those great UAW folks for all the financial problems GM now has.

Is that straight from the GM Corporate Policy Manual?

I have a lot of contempt for GM as I had nothing but trouble with my Sierra. And a lot of Sierra owners I know have reported trouble with their Vortec knock and AutoTrak mode select switches too. Or is that bad marketing on the part of GM?

 

I had to re-read that one to confirm you meant what you meant. I always thought they made their money when the car was sold? Or is it a Ponzi Scheme?

 

GM Finance - this is where the company makes most of it's money. That has been a major concern to the stock market for quite sometime.

On Wednesday 27th July, the press reported:

The finance arm of General Motors warned on Wednesday that it could be forced to cut back lending to customers of the world's largest carmaker if it continued to be rated as a junk bond.

GM Acceptance Corp has been exploring strategic options to return its credit rating to investment grade, but refused on Wednesday to say what that could involve or when it might make a decision. Some financial analysts believe GM could be forced to sell a stake in the highly profitable division in order to secure a rating upgrade, which would lower borrowing costs.

General Motors last night agreed to sell up to $55bn (£31bn) of car finance loans to Bank of America in a move described by the carmaker as a "landmark deal" to secure its liquidity.


With GM directly funding finance, I am not surprised to see a cash price vs a finance price. It is rare to see an auto maker linked so directly to a finance operation. Most salesmen want you to take their finance as it adds to their monthly commission.

GM has improved it's quality dramatically over the past 5 years, but failed to take advantage of this in their marketing campaigns. Quality is a perception and GM should be ashamed that it's work force stepped up to the plate and fixed many of it's quality issues.

It is clear our nation is reliant upon big foreign oil. More and more of our imports come from overseas." G.W. Bush --Beaverton, Ore., Sep. 25, 2000

 

Danny,
I see your points and agree with some of them but the customers don't "perpetually" wait as evidenced in a 41% sales increase for GM in June. The cycle beginning over and over is something I have thought of as an issue as well. However, they have been offering different incentives of some type since I have been in the biz and many of those years they made a lot of money with them. Never has the problem been this big. When market share numbers are released for June and July that will be an indicator of where we are headed. If it's up and then GM can hold that % through the end of the year then it was a huge success. Just my opinion. The only policy I make is when to go to bed and get out of bed and even that’s iffy.

Jayman said: "So if the financing isn't a scam, then why did GMC knock off so much once I whipped out my checkbook and paid outright? Or is it somehow a better "deal" to finance at "0.0%" than it is to pay outright?"

That was the rebate, it was real dollars. No one can borrow money at 0% or 1.9% so to get there you need real money to buy down the rate. You either get the money off the bottom line or they take those same dollars and pay the lender to lower the rate. Either way you realize all the benefit.

As far as your 200 GMC. Sounds like a crappy one, sorry.

I'm too dumb to know what a Ponzi Scheme is but the dealer pays GM for the vehicle as soon as it is shipped to the dealer. The dealer gets his/her money when they sell it. The rebate is a whole other topic, GM reimburses the dealer for the rebate.

Porridge said: “The finance arm of General Motors warned on Wednesday that it could be forced to cut back lending to customers of the world's largest carmaker if it continued to be rated as a junk bond.â€
Disturbing

Porridge said: "With GM directly funding finance, I am not surprised to see a cash price vs a finance price. It is rare to see an auto maker linked so directly to a finance operation. Most salesmen want you to take their finance as it adds to their monthly commission."
I disagree with just about every part of that statement.

Porridge said: "GM has improved it's quality dramatically over the past 5 years, but failed to take advantage of this in their marketing campaigns. Quality is a perception and GM should be ashamed that it's work force stepped up to the plate and fixed many of it's quality issues."
I agree with most of that, however, it wasn't just the work force, it was the President of GM on down that stepped up.

 

I personally don't see how GM will fare in the coming months without their discount program. It will be interesting to see if Ford and DC continue with theirs. As to supposed GM reliability, it is improving. My friend purchased a 2003 Saturn and have three transmissions replaced. When the third one went, they gave him a new car. So much for their quality. Now all they have to do is make nicer looking cars.

 

What is "real" money? I suppose there is a counterpart, like "fake" money? No, I didn't try to pay for my truck with counterfeit cash. The term "real" money sounds like something a politician would say.

As optioned, the truck came to about $44,900 Cdn. I guess 90% of folks finance their new vehicle, so the salesguy was busy while I had to take a call on my cell phone.

When I came back, he had the "manager approved" (You know what THAT means!) discount of $1,500, the GST/PST added (At 14% here, so $6,000 and change), and the payment schedule. I gave him a funny look, took out my checkbook, and told him I was going to pay for the truck outright.

I also told the guy he had to do WAY better than that or I was going to shove my checkbook back in my pocket and walk out. So that $44,900 truck was sold to me for $39,400 plus applicable taxes. I still have the sales sheet at home.

So on a straight cash deal, no trade to speak of (I had a 1990 Toyota 4Runner and a 1992 Honda Prelude and had already found buyers for them, so it was an in-and-out deal), they took off around $5,500. And since I did an in-an-out I didn't have to pay the GST or PST on the new truck, which saved me on $39,400 at 14%, or $5,516 in taxes.

Thus, I will make the argument that the GMAC magic "0.0%" or "0.9%" is an artificially low finance charge as the price of the vehicle is inflated to cover the true cost of borrowing the money.

Otherwise there is NO way that GMAC could lend at under 1% when it would COST them more to obtain the money on the market (At least Prime, and as of July 29 the Prime was 6.25%). That should be very obvious and is patently impossible, since they're lending far UNDER Prime.

Yet GMAC is GM's cash cow, so how is this possible at 0% or 0.9%? It's a gimmick, nothing more.

One thing is that all car manufacturers are getting increasingly reluctant to sell a car outright. I'm under the distinct impression that some dealers would rather you crawl under a rock than cut them a check.

With all the hidden charges and markups, and commissions of course, the dealer would much rather have you finance the car.