- The Washington Times - Wednesday, June 22, 2005

General Motors’ latest discount program is driving more consumers to its showrooms and prompting competitors to shift their advertising into high gear.

The car giant’s “employee discount for everyone,” which started June 1 and ends July 5, has attracted more customers who were planning to buy vehicles from Ford, Chrysler, Honda, Toyota and other non-GM brands, according to CNW Research Marketing, an Oregon firm that tracks how people spend money.

In June 2004, about 58 percent of the people who visited GM showrooms had already intended to buy a GM vehicle, according to CNW. This month, just 37 percent of the floor traffic were GM “intenders.”

The program is attracting “more consumers and an audience that General Motors hasn’t seen in a long time,” said Art Spinella, president of CNW.

“But this is a tactic and unless they turn it into a long-term strategy, it’ll be tough to maintain the momentum,” Mr. Spinella said.

GM’s share of retail sales of new vehicles for the first 12 days of June was 30.3 percent — up almost eight points from its retail share in May, according to Power Information Network, a division of J.D. Power and Associates.

GM’s competitors such as Chrysler Group, Ford Motor Co. and Toyota Motor Corp. have posted declines in market share from May.

“Our dealers are seeing increased traffic in their showrooms this month,” said Deborah Silverman, a GM spokeswoman. “And our consumers are telling us it’s a very easy program to understand.”

The “employee discount for everyone” is not a standard percentage off the manufactured suggested retail price, but instead is based on the make and model of the vehicle. Buyers can plug in information on GM’s Web site, www.gm.com, to get an approximate cost.

For example, a 2005 Pontiac Grand Prix costs $4,500 less than the manufacturer’s suggested retail price with the employee discount. A 2005 Chevrolet Trailblazer is $5,700 less than the MSRP, and a 2005 Cadillac Deville is discounted more than $10,000.

Mr. Spinella said the people who are buying GM products specifically because of the employee discount are buying more expensive models than they would without the discount.

GM’s program is “substantially moving the needle for them,” said Tom Libby, senior director of industry analysis at the Power Information Network. “At this point it looks like this may be their most effective incentive program, in terms of market share gain, since the post-9/11 zero percent financing program.”

After the September 11 terrorist attacks, GM was the first major auto manufacturer to offer interest-free loans to try to jump-start auto sales. Other car manufacturers followed suit.

Carmakers have been competing with each other to offer would-be customers deals, incentives and financing options they can’t resist. And customers have come to expect them. Consumers now expect $4,500 off the sticker price, compared with $2,100 off five years ago, Mr. Spinella said.

The employee discount is a much-needed boost for GM, which reported first-quarter losses of $1 billion, a sales slump for profitable sport utility vehicles, and the layoff of 25,000 manufacturing workers by 2008.

GM’s competitors have started aggressive advertising campaigns to remain top-of-mind with consumers, despite all the buzz surrounding GM’s employee discount.

Chrysler started a new campaign June 16 asking consumers to “do the math” when comparing Chrysler’s vehicles with its competitors, said Kevin McCormick, manager of sales communications.

Mr. McCormick said GM is getting a lot of attention now but “we want to make sure our message doesn’t get swallowed up in the hype.”

Dodge, a Chrysler brand, touts its “Summer Sales Drive” on its Web site and has deals that include zero percent financing for up to 36 months, plus $4,000 trade-in bonus cash or $4,000 consumer cash through July 5.

Ford started a new ad campaign June 9 called “The Truth,” which “dares consumers to compare our cash rebates to GM’s,” said Dave Reuter, a Ford spokesman.

The car manufacturer also has started incentives within the last week that include $5,000 customer cash on the Ford Explorer and Expedition or $1,000 cash and zero percent financing for up to 60 months.

The incentive ensures that Ford stays competitive, Mr. Reuter said.

“We want to remain on customers’ shopping lists,” he said.

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