GM Extends Incentives That Helped Fend off Toyota

Automaker Maintains Market Share as June Sales Drop

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DETROIT (AdAge.com) -- General Motors Corp. said its latest incentives on 2008 models will be extended through the July Fourth weekend because the promotion worked so well driving traffic in the final days of June.
GM will extend its 0% financing for 72 months incentive through the July Fourth weekend.
GM will extend its 0% financing for 72 months incentive through the July Fourth weekend.

The automaker introduced zero-percent financing for 72 months on June 23-30 on many 2008 models. The sale "sparked momentum by getting customers off the couch and back into the stores," said GM's Mark LaNeve, VP-vehicle sales, service and marketing in North America. "It really helped build demand." He said he believes the carmaker improved its market share by one point in the month to about 22%. As a result, GM fended off Toyota, which had threatened to take away its market-share lead in June.

GM dealers typically tally half their monthly sales in the last 10 days of a month, Mr. LaNeve said this afternoon in a conference call with analysts and reporters about the company's June U.S. sales. But he estimated the sales event translated to 60% of GM's total of 265,937 vehicles delivered in June.

That's 8% fewer vehicles sold than a year ago, when adjusted for three fewer selling days this June, and an 18.5% drop unadjusted.

Nipping at GM's heels
Toyota Motor Sales USA, which has been nipping at GM's heels in the U.S., today reported it sold 193,234 new vehicles in June, a decrease of 11.5% from June 2007 when adjusted for fewer selling days.

McCann Erickson, Birmingham, Mich., handled the creative for what GM called its 72-Hour Sale, promoted via TV, radio, newspapers and online. A GM spokesman called it "corporate advertising at the divisional level," with each GM brand using the theme but showing only its models in ads.

The spokesman declined to disclose spending by medium. But a Saturn dealer said newspapers were broadly used, at least in the first days of the sale, because of their fast closes. A Buick-Pontiac-GMC dealer said many of GM's regional dealer associations use newspaper, radio and online in the summer months because consumers don't watch as much TV.

In early 2006, Mr. LaNeve announced that GM would no longer do broad sale ads with vehicles from different brands. He vowed today GM would not have "a steady diet" of incentive sale ads, because "after a while they start to lose their effectiveness."

"We're well-positioned"
GM's Mike DiGiovanni, executive director-global market and industry analysis, said the automaker's retail sales (vs. fleet sales) accounted for 75% of the total, with 45% of retail sales in midsize cars, midsize crossovers or smaller vehicles. Nearly every model GM sells in those categories posted higher retail sales in June compared with a year ago, he said. "Clearly our products are where the market is moving to, so we're well-positioned."

"The whole [auto] market is depressed," he said, because of the economy, high gas prices, the credit crunch and the housing-market malaise, which are putting pressure on every vehicle segment. He revised GM's 2008 outlook for industry sales to 15 million vehicles, down from its mid-15 million estimate earlier this year.

In June, roughly 40% of the vehicles GM sold had four-cylinder engines vs. about 22% last June, Mr. LaNeve said. If GM had had more four-cylinder models available, he added, it would have sold between 8,000 and 10,000 more vehicles.

He said Pontiac's new G8 is a rare exception to that, with buyers preferring an eight-cylinder engine in that car over a V-6.

Getting the word out
Mr. LaNeve said one of GM's big challenges is getting the word out about its broad line of fuel-efficient vehicles. "It's very tough to get that story told, but we are doing our damndest to get that story out there."

One way GM is addressing that issue, he said, is moving 25% of Buick-Pontiac-GMC's "media assets" to the new "Fuel Economy Guide" ad campaign that lets consumers figure out fill-up costs and the cost per gallon for specific GM models.
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