UPDATED: 6/23/08 4:33 pm EDTDETROIT -- General Motors said Monday that it would launch a 0 percent financing program starting Tuesday, June 24, while raising prices on 2009 models by an average of 3.5 percent.
GM executives also said they plan to boost output of some compact and mid-sized cars and crossovers, and that they have hired Citibank to help review the Hummer brand’s future.
In an effort to boost June sales, GM plans a “72 Hour Sale” from Tuesday through Monday, June 30, GM’s Mark LaNeve said. LaNeve is GM’s vice president of vehicle sales, service and marketing.
The sale will offer customers 0 percent financing for 72 months on all GM brands, LaNeve said.
“We know how to do this, we throw considerable media weight behind it," LaNeve said on a conference call with journalists today. "It’s a really simple offer that’s very compelling. It’s a good way to finance if someone’s upside down on their vehicles.”
The sale includes over 80 percent of GM's grounded 2008 model year, he said. It covers all GM trucks and large SUVs, along with many smaller SUVs.
None of GM's hot-selling crossovers such as the Buick Enclave, GMC Acadia and Saturn Outlook are included.
The only models excluded are the ones that we are very tight on inventory, LaNeve said.
GM also will offer $500 cash to customers who buy, rather than lease, vehicles, say dealers who listened to a conference call with LaNeve earlier Monday. LaNeve also said GM will raise prices of 2009 vehicles an average of 3.5 percent.
"It won’t be 3.5 percent across the board," LaNeve said. "It’ll be a little higher on some products and lower on others."
Premium brands included
GM has included the premium brands in the 72 Hour Sale. Cadillac includes everything except the CTS, which only gets zero percent for 36 months on the 2008 model, a dealer said. GM put an additional $1,000 cash on the Escalade. Saab includes the 9-3 sedan and 9-7 SUV and Hummer includes H2 and H3.
At Thompson Sales Co. in Springfield, Mo., owner Lynn Thompson believes he will sell an additional 45 to 50 cars during this last week now due to the sale. That will bring him closer to last June's sales figures, but he'll still be down about 10 percent.
“The first 17 days of the month were horrendous, just awful," Thompson says. "I think the gas price shock…all you saw every time you turned on the TV was that gas was up, gas was up…the media was just feeding on it. It was unbelievable. I think it just wore people down.”
More production cuts announcedLaNeve said GM is hoping the sales lull will bottom out in the second quarter.
"Up to the election you’ll still have a lot of consumer confidence issues and cautiousness because we’ll get a lot of economic news and both camps pointing fingers," he said. "We hope Q2 was the bottom."
Dealers say they knew price hikes were coming for 2009 models.
“Some of that is because they’re adding more content, but some of it is because commodities are going up and the dollar is weaker,” says a dealer who listened to the call but declined to be named. “We all knew price increases were coming.”
Separately, GM said it plans to reduce pickup truck and SUV production by 170,000 units in the second half of the year, while increasing the output of cars.
A GM spokesman said the automaker plans to increase production of cars and crossovers by 47,000 units through overtime at certain plants.
Summer shutdowns will be extended in seven GM truck plants to throttle back production. A few plants will also have additional shutdowns later this year.
Dealers say LaNeve said GM will add a third shift at its Lordstown, Ohio, assembly plant, where the Pontiac G5 and Chevrolet Cobalt compact cars are built. And GM will go on maximum overtime at its plants in Orion Township, Mich., and Kansas City, Kan. GM builds the Pontiac G6 and the Chevrolet Malibu mid-sized cars at Orion Township and builds the Malibu and Saturn Aura at the Fairfax plant in Kansas City.
GM also will increase crossover production, dealers say. GM will add 3,500 GMC Acadias and 7,000 Buick Enclaves to the mix by year end. GM builds those vehicles at the Lansing Delta plant in Delta Township, Mich.
Finally, LaNeve said GM has hired Citibank to help it complete its study of Hummer. On June 3, GM CEO Rick Wagoner said GM is conducting a strategic review of Hummer and is open to “all options,” from revamping the product lineup to a partial or complete sale of the brand.
LaNeve said Citibank would "evaluate, solicit and review any offers we may have for the brand or any other offers we might have such as a revamp of the brand, partnerships or licensing. We’re looking at all options.”
LaNeve declined to comment on potential buyers.
Reuters contributed to this report