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Old 11-17-2006, 08:20 AM   #1
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Default GM offers year-end discounts (up to $2,000 on 2006 Models)

GM offers year-end discounts (up to $2,000 on 2006 Models)


GM offers year-end discounts

Company will offer up to $2,000 on vehicles in effort to clear out excess 2006
models by Jan. 2.

General Motors Corp. will launch a year-end sales push this weekend by offering up to $2,000 in discounts on many vehicles as it tries to clear out 2006 model inventories.

GM will run its "Red Tag" event from Saturday to Jan. 2. The discounts will be available on Chevrolet, Pontiac, Buick, GMC and Saturn vehicles.

"This program fits right into our plans," GM spokesman John McDonald said. "We're really looking to build up some enthusiasm going into 2007."

Instead of setting specific discounts per vehicle, GM is giving cash to dealers who will decide which vehicles get discounts and how much.

Such flexibility is part of GM's ongoing quest to offer discounts that are big enough to attract shoppers without cutting too deeply into profits.

According to Edmunds.com, an independent research Web site for car buyers, GM spent an average of $2,797 per vehicle on incentives in October, which is down 13 percent from September but up 3.5 percent from October of last year. Edmunds factors in interest rates and lease programs, along with cash rebates to consumers and dealers.

McDonald said GM has reduced overall incentive spending by $660 per vehicle on a year-to-date basis through October, compared to the same period last year.

With the "Red Tag" event -- which is being promoted with the tagline "See some red, save some green" -- GM aims to sell 2006 models that account for about 200,000 of the cars and trucks in GM's one million-vehicle inventory, McDonald said.

The GM program gives dealers $250 for every vehicle on their lot that's included in the incentive program. The dealer can then distribute the discounts as he or she wishes, up to $2,000 for any particular vehicle. A red tag hanging in the windshield will advertise the discount.

"The focus is to move inventory and put the attention where its needed most based upon each dealer's inventory," dealer John Rogan of John Rogan Buick-Livonia said of the incentive program. "It's a refreshing way of handling incentives."

The automaker is trying to reduce overall incentive spending as part of a sweeping turnaround plan. Heavy discounts can erode vehicle resale values, confuse consumers and cut into profits.

Incentives can do long-term damage to a company by making the vehicles seem less attractive, said Philip Reed, Edmunds.com consumer advice editor.

"When you start putting a lot of money on something, it appears people don't want it," he said.

At the same time, the deals are necessary to compete.

Ford Motor Co. on Thursday said it will extend no-interest loans for 2006 models as well as some cash-back and low interest financing offers on 2007 models.

Industrywide, automakers spent $2,398 on incentives per vehicle in October, about $400 less than GM's average.

GM is still producing too many vehicles to drastically cut back incentives, said John Casesa of New York's Casesa Shapiro Group LLC.

"How much GM spends on incentive deals depends directly on how weak their market share is," he said.
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Old 11-17-2006, 08:45 AM   #2
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Join Date: Mar 2001
Location: www.nugateway.com

more info:


Saving Green
GM to launch Red Tag year-end sale Saturday

DETROIT -- General Motors will start its year-end clearance sale, called the Red Tag Event, on Saturday, Nov. 18.

The sale will run through Jan. 2 and include all brands except Cadillac, Hummer and Saab. The Chevrolet Corvette and Pontiac Solstice also are not included, GM says.

The sale is similar to the promotion GM ran last year at this time, spokesman John McDonald said today.

"What a consumer will see is a Red Tag hanging from the mirrors," McDonald said. "It will list the MSRP and then the price the consumer will pay after the incentives. The dealer decides how much the discount will be."

The discount could range from nothing to $2,000 per vehicle. The program covers 2006 and 2007 models, McDonald said. It also includes most existing incentives on vehicles, so a vehicle could end up with more than $2,000 of incentives on it.

GM employees get a maximum discount of $500, said John Rogin, owner of John Rogin Buick in Livonia, Mich.

"We asked them to start it early this year," Rogin said today. "Why have a customer stand around in the middle of November and not buy a car because they're waiting for the end-of-year sale?"

GM sent notices to dealers about the sale today, McDonald said. He would not discuss specifics on how the program works, but dealers say each dealer will get a certificate worth $250 for each vehicle in inventory. The dealer can apply up to eight certificates, or $2,000, on any one vehicle.

"If the Buick Lucerne is turning quickly and doesn't need any incentive money, then a dealer could take that certificate money and put it on a 2006 model or some other vehicle," Rogin said.

Dealers have until Friday, Nov. 17, to tell GM the vehicles on which they plan to add the incentive money, Rogin said. He said he has 10 2006-model vehicles left in stock and likely will use many of his certificates on those vehicles.

GM has just over 1 million 2006- and 2007-model vehicles in inventory, McDonald said. He said 80 percent of those are 2007s.

GM likely won't spend all its incentive money -- about $250 million -- because dealers won't sell every vehicle they put the money on, said Gordon Stewart, president of Stewart Management Group in Harper Woods, Mich.

"(This sale) is a little confusing, to say the least," Stewart said today. "I wish it were more clear and didn't have so many twists to it. The simplest incentives often work the best."

Stewart said he'll likely put most of his certificate money on his 2006 models.

GM plans to advertise the sale aggressively in print and on TV, radio and the Internet, McDonald said.

He said GM will advertise the sale through the respective brands with the same tag line as last year's promotion: "See some red, save some green."
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