WSJ - GM Will Offer Steep Discounts to Clear Inventory

[Klaus]

GM Will Offer
Steep Discounts
To Clear Inventory

By LEE HAWKINS JR.
Staff Reporter of THE WALL STREET JOURNAL
June 1, 2005; Page D3

In its latest move to clear out heavy inventories of 2005 vehicles, General Motors Corp. announced today that it will offer to the general public steep discounts similar to those it offers its employees.

GM disclosed details of the plan today to dealers. GM reported a 12% decline in May sales results today. GM employee discounts vary by the model, but can range from 3% to 4% below invoice price. Other rebates can also be applied to lower the purchase price, dealers say.

The Detroit Free Press reported GM's plans in an article Saturday.

GM badly needs to boost sales after a weak performance in the first four months of this year and the auto maker's $1.3 billion loss at its North American operations in the first quarter. Now, GM dealers are sitting on lots full of unsold large sport-utility vehicles, just months before GM is expected to begin the crucial launch of its next-generation large SUVs.

As of April 30, GM had 152 days' supply of its large Chevrolet Tahoe SUV, according to Autodata. That is more than double the level considered ideal.

If GM can't quickly work down the inventory overload, dealers could hold back on orders for 2006 models.

GM also is expected to cut production in the coming months to work down inventory levels. Delphi Corp., GM's No. 1 supplier, said last month it expected GM to slash North American production nearly 10% this year compared with last year.

A Chevrolet Silverado that is priced at about $28,417 sells for $24,225 with an employee discount, dealers say. It isn't clear how GM's new deals will work. GM has several levels of discount deals that it offers to employees, their relatives, and employees of suppliers and other companies with ties to GM. It also isn't clear whether GM will offer rebates on top of discounts to sticker prices.

Mark LaNeve, GM's new head of North American Sales, Service and Marketing, last month said he intends to shift GM's vehicle-pricing strategy away from the past practice of using big rebates to offset high sticker prices and expensive option packages. "Customers tell us they want more transparency and value, and a compelling [manufacturer's suggested retail price]," Mr. LaNeve said.

[Klaus]

GM Will Offer
Steep Discounts
To Clear Inventory

By LEE HAWKINS JR.
Staff Reporter of THE WALL STREET JOURNAL
June 1, 2005; Page D3

In its latest move to clear out heavy inventories of 2005 vehicles, General Motors Corp. announced today that it will offer to the general public steep discounts similar to those it offers its employees.

GM disclosed details of the plan today to dealers. GM reported a 12% decline in May sales results today. GM employee discounts vary by the model, but can range from 3% to 4% below invoice price. Other rebates can also be applied to lower the purchase price, dealers say.

The Detroit Free Press reported GM's plans in an article Saturday.

GM badly needs to boost sales after a weak performance in the first four months of this year and the auto maker's $1.3 billion loss at its North American operations in the first quarter. Now, GM dealers are sitting on lots full of unsold large sport-utility vehicles, just months before GM is expected to begin the crucial launch of its next-generation large SUVs.

As of April 30, GM had 152 days' supply of its large Chevrolet Tahoe SUV, according to Autodata. That is more than double the level considered ideal.

If GM can't quickly work down the inventory overload, dealers could hold back on orders for 2006 models.

GM also is expected to cut production in the coming months to work down inventory levels. Delphi Corp., GM's No. 1 supplier, said last month it expected GM to slash North American production nearly 10% this year compared with last year.

A Chevrolet Silverado that is priced at about $28,417 sells for $24,225 with an employee discount, dealers say. It isn't clear how GM's new deals will work. GM has several levels of discount deals that it offers to employees, their relatives, and employees of suppliers and other companies with ties to GM. It also isn't clear whether GM will offer rebates on top of discounts to sticker prices.

Mark LaNeve, GM's new head of North American Sales, Service and Marketing, last month said he intends to shift GM's vehicle-pricing strategy away from the past practice of using big rebates to offset high sticker prices and expensive option packages. "Customers tell us they want more transparency and value, and a compelling [manufacturer's suggested retail price]," Mr. LaNeve said.