The brilliant GM Employee Discount for Everyone marketing campaign has triggered one of the great summer blowout sales of all time.
The concept's simplicity cut through the clutter. Now Ford Motor Co. and the Chrysler group must follow suit. But General Motors' brain trust should not be tempted to wring every last sale from the campaign. If it does, GM may be saddled with an autumn sales slump at the very moment that it plans a transition to value pricing.
To prepare for that change in strategy, GM has set 2006-model sticker prices closer to transaction prices. GM wants to wean customers off incentives so it can focus on vehicles' performance, features and styling. Then GM can make some money on its cars and trucks - in theory.
It's a good idea that will be difficult to carry out. GM's plan will be doomed if the automaker tries to wring out every last sale this summer.
GM, its suppliers and its dealers are not well served by a steady diet of boom-or-bust sales cycles. Fluctuating sales make it hard for suppliers to plan output and hard for dealers to control inventories. And they make the periodic sales troughs even deeper, which puts more pressure on GM to offer big incentives all over again. To be sure, Ford and Chrysler have proved willing to offer big incentives if unsold inventories grow too large. But in recent years, GM usually has been the first to launch a price war.
The GM Employee Discount for Everyone program was an inspired bit of marketing, just as GM's 0 percent financing campaign was inspired in 2001. But consumers eventually will grow immune to the incentive's appeal. And when they do, GM will struggle to ward off an epic sales hangover.