DETROIT - General Motors will not extend its Employee Discount for Everyone beyond Aug. 1 due to dwindling 2005 inventory.
Automotive News reported last week that some GM dealers say they lost sales because of low inventory. GM is not allowing dealers to order any additional 2005 models.
"Inventory levels overall remain in a very comfortable area for us," says GM spokesman Jeff Kuhlman. "We've reduced 2005 inventory pretty much to where we wanted to, which makes the program a success in that regard. We're starting to get the 2006 models onto dealers' lots now."
By July 1, GM had a 48-day supply of cars and trucks. That was down from a 73-day supply on June 1. A 60-day supply is considered healthy.
Ford Motor Co. and the Chrysler group are running similar programs offering employee pricing to clear 2005 inventory. Their plans also are set to expire on Aug. 1.
"As with any incentive program we are evaluating its effectiveness and will announce any changes at its conclusion," a Ford spokesman said.
Likewise, the Chrysler group will not say whether it will extend the incentive program until Aug. 1, spokesman Jason Vines says.
"We still have a week to go, and we're very happy with the program," Vines says. He emphasizes that inventory is down "substantially" from a month ago. In making its decision, Vines says the Chrysler group will consider the competitive landscape, taking into account GM's decision to discontinue its incentive sale.
"We'll look at our own inventories and what we have coming in 2006," Vines says. "We have experts who manage our inventory, and we'll see what we want to do."
GM now attempts the tricky maneuver of moving away from incentives and into value pricing. GM plans to cut the base sticker prices on most of its 2006 Chevrolet, Buick, Pontiac and Saturn models and marginally increase Cadillac's prices. GM has not released prices for Hummer, GMC and Saab.
Value pricing is intended to trim costly rebates and make it easier for consumers to cross shop GM vehicles against competitors, whether it is on the Internet or in dealerships. That's because customers can better compare vehicle features without worrying about details of an incentive deal.
GM's Kuhlman says: "The employee discount program helped us take the first step in communicating on a features and benefits basis versus a deal basis. Consumers knew what they would pay, so we spent more time talking about quality and fuel economy. It allowed us to change the paradigm of having to push the deal so hard that we couldn't push the features of the vehicles. That's where we want to be in 2006."
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