GM REVERSES COURSE, EXTENDS EMPLOYEE-PRICE PROMOTION

Discounts to Run Through Sept. 6; Chrysler to Continue Campaign Indefinitely

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DETROIT (AdAge.com) -- General Motors Corp. surprised the auto industry today by extending its employee discount sales program through Sept. 6, a day after the consumer promotion was scheduled to end. The move came a day after Ford Motor Corp. extended its own version of the incentive pricing program.
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The automaker said the discounts would continue on all 2005 models except the Chevrolet Corvette, Hummer H1 and Pontiac GTO. Those three models are virtually sold out, which is why they aren’t included in the promotion, a spokeswoman said.

GM sales
GM said today it sold 530,027 cars and trucks, up 20% compared with July 2004. A GM spokesman had said the automaker would not extend the program after it expired yesterday and instead would announce this week "value pricing" for 2006 models in an attempt to lower incentives.

GM introduced employee-price promotions in June and copied by Detroit rivals Ford Motor Co. and DaimlerChrysler.

Ford sales
Ford’s unit sales last month jumped to 366,548 vehicles, or 28.5% higher than July 2004. Ford also said it set a modern-era industry record for monthly car or truck sales, with 126,905 F-Series pickups sold last month. The automaker believes that is higher than any monthly tally for a single model since the Ford Model T in the 1920s.

Ford yesterday said it would not end its "Employee Discount" promotion this week as originally planned but will extend the price-cutting program through Labor Day.

Chrysler sales
Chrysler Group today said its July sales jumped by 27% to 240,146 units vs. a year ago. (Mercedes-Benz USA, its DaimlerChrysler sibling, also reported its best July ever, selling 20,791 vehicles, 10% more than last July.) Chrysler today said it will extend its employee-pricing program indefinitely on 2005 models, excluding the Chrysler 300/300C, Dodge Sprinter, Dodge Viper and all SRT vehicles.

Meanwhile, results of a survey of consumers interested in purchasing a new car or truck shows they like the employee discount programs. More than 90% of 900-plus new vehicle "intenders" would like to see employee discounts continued, according to research findings released today by CNW/Marketing Research. Nearly 80% of the respondents said employee-discount prices are “probably” or “certainly” lower than what prices would be otherwise. CNW also said many shoppers reported they will wait for the next great deals if employee discounts are eliminated.

Pricing like Wal-Mart
Art Spinella, president of CNW, said people want “everyday low prices like Wal-Mart” when they buy a new vehicle. He said they want to feel they’re getting the lowest possible price today and if the same model they bought gets a discount the day after, they don’t expect the price to be thousands of dollars cheaper. Consumers say they like the employee discounts because they are easy to understand.

CNW uncovered good news for GM as a result of its employee-discount pricing. Many intenders who didn’t buy in June or July told CNW Aug. 1 that they kept a GM brand on their shopping lists, partly due to the “positive word of mouth and residual positive feelings about [GM’s] broadcast ad messages.” More than 45% said a GM model was still in the top three slots on their lists.

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