Chrysler and Ford to offer employee pricing to fight GM

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By OLIVIA MUNOZ, Associated Press Writer Tue Jul 5, 6:47 PM ET DETROIT - Ford Motor Co. jumped on the employee-discount bandwagon Tuesday, announcing it will join GM and Chrysler in allowing customers to buy vehicles at employee rates. ADVERTISEMENT Ford's decision follows a huge sales surge General Motors Corp. saw last month because of the heavily promoted discount, which drove monthly sales to their highest total in nearly 19 years. Chrysler said Friday it also would match such programs. GM has given the same discount it provides to employees to anyone buying most new GM cars or trucks since June 1. The promotion, which was set to expire Tuesday, will remain in effect until Aug. 1. It includes all 2005 GM vehicles except the Chevrolet Corvette, Pontiac GTO and GMC medium duty trucks. "It's the summer selling season and that first month of the deal helped (GM) clear out a lot of their 2005 models," said analyst Ron Pinelli, president of Woodcliff Lake, N.J.-based Autodata Corp. "To continue with it just makes good sense." Ford Motor Co. said Tuesday its "Ford Family Plan" will let all customers buy most of its 2005 models at the employee rate beginning Wednesday. The promotion excludes the Ford Mustang, GT and the Escape hybrid. It also will run through Aug. 1. "Consumers made it pretty clear in the month of June that they wanted a clear plan for purchasing their cars," Ford spokesman David Reuter said. A Ford Explorer XLT that normally sells for $32,895 costs employees $28,739. After existing customer cash incentives, the sport utility vehicle would sell for $24,739 under the Ford Family Plan. A popularly equipped Lincoln Navigator that normally would sell for $51,145 will be available for $42,133. At GM, a popularly equipped 2005 Buick LaCrosse CX, which normally would sell for $23,495, costs $19,944 with the discount, and a new GMC Envoy would now sell with a discount of more than $5,990. DaimlerChrysler AG's Chrysler Group had announced Friday its plan to also match the employee discount incentive starting Wednesday and running through Aug. 1. The plan excludes several models, including the popular Chrysler 300, the Dodge Viper and the Dodge Magnum, Chrysler spokesman Kevin McCormick said. GM, the world's largest automaker sold 550,829 vehicles last month, up from 374,970 in June 2004. That's a 41 percent increase after accounting for differences in the number of selling days between last June and this June, a sharp contrast from the single-digit growth the company has posted so far this year. Almost all the growth came from light truck sales, which jumped 69.2 percent to 375,092 vehicles. The Colorado, Equinox, Tahoe and Trailblazer models posted some of the largest sales increases. Ford said domestic sales fell 2.5 percent in June from a year ago and dropped 4.3 percent for the first six months of the year despite hits like the sporty Mustang and growing sales of its crossover vehicles. Chrysler's sales were up 1.1 percent in June, but the company saw an 11 percent drop in demand for its popular Chrysler 300C sedan, and a 1.5 percent decline in overall car sales. Chrysler's total sales were up 5.2 percent for the first six months of the year. Gary Dilts, Chrysler's senior vice president of sales, said the company decided to match GM's offer because customers were attracted to its simplicity. The discount's popularity came from a combination of aggressive marketing and the appeal of getting an inside deal, said David Cole, chairman of the Center for Automotive Research in Ann Arbor. "The general public views the employee discount as pretty good no matter what business you're in," he said. The automotive industry also is looking at ways to cut down on large incentives, he said. "Over the last few years car companies were raising prices to give bigger incentives. Now, they're moving toward more realistic pricing with reduced incentives," he said. Still, Cole said offering an employee rate to all buyers is a bold step. "This is a real bombshell. Rarely do we see this type of impact in such a short time," Cole said of GM's soaring June sales. But he warned that more sales now could mean fewer customers later. In Tuesday trading on the New York Stock Exchange, shares of GM rose 15 cents to close at $34.80. Ford shares finished up 9 cents at $10.40, while DaimlerChrysler shares fell 38 cents to $40.10. ___ On the Net: Ford Motor Co.: http://www.ford.com/ General Motors Corp.: http://www.gm.com Chrysler Group: http://www.chrysler.com
 
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Cars cost way too much for the crap that they are. Way over priced and real crappy when it comes to engineering. There is no shortage of cars but the consumers are taking it up the you can guess what I am referring to when they buy a car , but then maybe they like it.
 
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This is going to backfire on Saturn and SAAB: Now people will begin to suspect they're part of GM. Yuck! No discount on the GTO? Isn't it selling really slowly?
 
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Does anybody know if these deals apply in Canada too? I don't want to ask down at the dealer and get the salesmens hopes up. [Big Grin] I sure wish I was in the position to get a single cab 4x4 Dodge Cummins with a stickshift right now. Imagine getting a screaming deal on a truck that'd last you 20 years. [Smile] Steve
 
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quote:
Originally posted by Steve S: Cars cost way too much for the crap that they are. Way over priced and real crappy when it comes to engineering. There is no shortage of cars but the consumers are taking it up the you can guess what I am referring to when they buy a car , but then maybe they like it.
Very postive outlook [Smile] I wholeheartly disagree with your statement. Currently cars are much cheaper vs current wages vs years past. At the same time more powerful, safer, efficient, less maintenance, last longer, and offer more standard equipment.
 

WDP

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All the car companies have multiple employee discount programs. Some are for the "real" workers on the assembly line, others for suppliers and lesser sub contractors. The really good discounts are not the programs offered to the public. All advertising hype to lure in the uninformed. Want to buy a car? Talk and walk, they will call you with a better offer.
 
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We are in the end of model year clearance season anyway. Huge discounts are normally offered on remaining inventory this time of year. This thing is a gimmick that seems to be working because it is novel sounding and open instead of the old system where the dealer was given extra allowances to move "iron".
 
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It will be interesting to see what impact this has on sales for next year. Will they suffer because so many people took advantage of this offer? The used car market surely will be hit hard because of the flood of trade ins as well. Will the price of good used cars attract buyers away from new cars in the next year or so? I sincerely hope that GM and Ford recover from their problems, but I can't help but think that they are being a bit short-sighted with this. While it cleans up some inventory, it's not addressing the core problems of both companies (both real and perceived).
 
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Why do car manufacturers bother with 'dealers', and gimmicky sales schemes? Why can't you order a car on-line, for delivery to your place, with exactly the features you want, much like you can buy a Dell PC in a similar fashion? When every industry in the world has moved away from the concept of huge inventories, why do car manufacturers continue to insist on having dealers' lots literally filled with cars? Sounds to me like an industry that is fundamentally stuck in the past.
 
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quote:
Originally posted by pitzel: Why do car manufacturers bother with 'dealers', and gimmicky sales schemes? Why can't you order a car on-line, for delivery to your place, with exactly the features you want, much like you can buy a Dell PC in a similar fashion?
Because then all the redundant cost adding parasites in the supply chan would have to find other jobs.
 
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pitzel... Daewoo tried decentralized delivery in the mid-90's. You'd get the cars fixed for warranty problems at Kmart's Penske garages. [crushedcar] College kids working part time had some involvement with the paperwork/sale on new cars. I think it would be super-awesome if you could buy a car through your local dealer (so they get to keep their market control) then save the $600 shipping fee by going to the factory/port yourself. Then you can enjoy a road trip in your own new car. The used car market is going to take a crazy hit: Imagine if 50% of buyers are typically new car buyers but that stretches to 58% with incentives. Then the remaining 42% get to pick over a used car fleet at prices that should be discounted from new transaction price. That is, you're losing used car buyers in droves so the glut of inventory will only get worse.
 
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quote:
Originally posted by michaelc80: It will be interesting to see what impact this has on sales for next year. Will they suffer because so many people took advantage of this offer? The used car market surely will be hit hard because of the flood of trade ins as well. Will the price of good used cars attract buyers away from new cars in the next year or so? ...
The real losers are people who try and trade in late model cars. The value of late model used vehicles will surely drop due to the lower price of new cars.
 
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quote:
Originally posted by michaelc80: It will be interesting to see what impact this has on sales for next year.
The effects will linger on for years. One thing they will definitely do is set a new lower percieved value for American cars in the eyes of consumers. The "employee cost" discounted prices after years of other rebates should permanantly lock in the expectation that American cars should cost less than imports and a lot less than sticker price, maybe even less than so called dealer price now. That said, short of building cars that more people want to buy, I don't know what else they can do. Maybe they should try building cars that more people want to buy.
 
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If this employee discount sale fails to help, can we expect them to tie on the hachimaki, have a drink of saki and sell out to Toyota?
 
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