The company is doing so because of a lack of credit funding, said spokesman John McDonald.
GM had announced a financing incentive program through GMAC Financial Services that would start Oct. 1 and run through Jan. 5. The program offered 3.9 percent consumer loans for 60 months on all used models of the Chevrolet Impala and Pontiac G6 sedans and Chevrolet Silverado and GMC Sierra trucks. But on Oct. 17, GM sent a notice that it would end the program Nov. 3, McDonald said.
As a result, many GM dealers worry they won’t be able to move the inventory they built with the understanding that the program would run through Jan. 5.
“It’s a tough situation for everybody,” McDonald said. “It really shows how pervasive the impact is for this credit crisis. If there’s no money to do this stuff, there’s no money to do this stuff.”McDonald said GM is studying future incentive programs. He said GM plans a different certified used-car incentive on Nov. 4, but he declined to give details.
“Obviously, the dealers are our customers,” McDonald said. “We want them to be successful, but you can’t get to the point where you’re putting yourself in financial difficulty.”
'Bait and switch’
One GM dealer in suburban Detroit said the Impala, G6, Silverado and Sierra make up 50 percent of his GM used inventory. He called GM’s move a “bait and switch.”
“The market’s going to fall on those cars because they’re no longer a featured vehicle, and we bought them to supply them through the end of the year. Now what?” he asked.
At Thompson Sales Co. (Buick-Pontiac-GMC-Cadillac-Saab) in Springfield, Mo., the four nameplates make up about 18 percent of the GM used vehicles there. Owner Lynn Thompson bought them at auction for about $200 or $300 more than for what they might normally sell. That’s because their price rose when GM came out with the incentive program.
“We pay more at auction for them,” Thompson said. “Then they drop the program. We’ll sell them, but it’ll be a much slimmer margin than it was before.”
Dealers concerned for GM
At neighboring Springfield, Mo., dealership, Reliable Chevrolet, managers kept their used-vehicle inventory low, so they do not have a lot of these vehicles in stock. Still, one employee there, who asked not to be identified, said he has never seen GMAC cancel a program this early. He said he takes it as a sign of the severity of GM’s financial situation.
“They haven’t given us a clue as to what they were going to do,” the employee said. “Anything GM does doesn’t surprise me right now. I hate to say that. We’re in a survival mode right now; everyone is.”
Said Thompson: “This is the first time that I can remember they stopped a plan before they said they would, and I just hope they’re coming out with a better plan. I’m surprised they announced it so early. That’s a concern for me.”
He remains optimistic that GM will offer dealers either an early Red Tag program or some other incentive, he said, adding: “I don’t think they’ll leave us high and dry.”