GM TO CUT ADVERTISING FOR INCENTIVE PROGRAMS
Could Slash Ad Budget by $200 Million
GM REPORTS $8.6 BILLION LOSS FOR 2005
North America Continues to Drag Down Automaker's Results
GM TO LOWER PRICES ON MOST 2006 VEHICLES
Cites Challenge From Asian Automakers
“We were criticized for being very dependent on incentives,” said Mark LaNeve, VP-sales, service and marketing for GM in North America. “I see what some of my competitors are doing -- been there, done that and I know what the ending looks like.” He said GM’s new simplified pricing, introduced in early January as a way to wean the automaker off incentives, is resonating with consumers
Paul Ballew, executive director-global market and industry sales at GM, said GM’s overall incentive spending is “down significantly” from a year ago.
Those broad incentive programs, which started after Sept. 11, 2001, to jumpstart sales, cause big peaks and valleys in monthly sales as the programs come and go, Mr. LaNeve said in January.
The automaker’s average transaction price across its portfolio will be 3% to 4% higher in the first quarter than a the same period a year ago, while the industry average will be roughly 1%, Mr. Ballew said. And the resale value of GM’s large pickups rose by an average of three points, while the average for its midsize cars jumped by six points.
GM, however, has a ways to go before declaring victory. It announced in mid-March in a restatement of its 2005 results that its global loss was $10.6 billion -- $2 billion more than it had initially reported.
SUV sales slide
Meanwhile, midsize sport utility vehicles sales continue to slide. Mr. Ballew, citing data from J.D. Power & Associates, said overall industry incentives on midsize SUVs tallied $3,684 per vehicle this month compared with $541 in March 2005. At $3,906, GM is spending less per unit than Ford Motor Co.’s $4,196 and DaimlerChrysler’s eye-popping $6,021. But the top three Japanese transplants are faring better, with Nissan North America spending $2,940 per unit, Toyota Motor Sales USA spending $1,742 per unit and Honda spending the least, $1,545.
The industry’s total retail sales of midsize SUVs in the first quarter will drop by 15% vs. a year ago, Mr. Ballew projected.
Mr. Ballew predicted the auto giant would sell fewer vehicles in the U.S. this month than a year ago, and that overall the industry would sell fewer units than last March. The industry releases March U.S. vehicle sales next week.
“We’ve taken some very painful steps to run the business the right way,” Mr. LaNeve said. “We are sticking with our strategy.”