DETROIT -- General Motors is cutting sticker prices on all Chevrolet, Buick and GMC products and many Pontiacs in an aggressive move to stabilize its market share and cut spending on incentives.
GM will launch a television and print advertising campaign to promote the new prices. The price cuts and the ad campaign start Wednesday, Jan. 11. The price cuts will affect vehicles that account for 80 percent of GM's total sales volume, said Mark LaNeve, vice president of North America Vehicle Sales, Service and Marketing.
For example, the new base price of the 2006 Cobalt LS coupe will be $12,990 including shipping. That is $1,500 less than the current base price of $14,490.
CEO Rick Wagoner joked he'd like to get incentives down to zero, but knows that is not realistic.
"Obviously, if we make a move like this we're putting forth a lot of effort and giving up some revenue by taking the MSRPs down," Wagoner says. "We would hope to significantly reduce incentives. The market's going to tell us how that plays out."
To compensate for the price changes, GM will be changing the dealer discount on some product lines, LaNeve said. A change in the dealer discount means there will be a smaller gap between the invoice price and the sticker price on a vehicle.
When pressed, LaNeve says GM did a "very slight reduction" in dealer margins and says margins are still in line with the industry and competition. LaNeve said cuts to dealers' margin ranges from zero to three points with the average being a one-point. He says the margins still give dealers room to negotiate.
"Anytime you trim dealer margins, they're not crazy about that," LaNeve says. "But our dealer council loved the direction, loved the new price points and has given us a strong endorsement that this is the right way to go."
Some examples of prices changes on Chevrolet vehicles:
The new base price of the Impala LS will be $20,990 including shippin, $1,000 less than the current base price.
The Silverado regular cab WT will be repriced to $16,990 including shipping, down $2,275 from the current base price. The crew cab version of that truck will be repriced to $25,490, $2,500 less than the current base price.
LaNeve planned to outline the details of the pricing plan with dealers during a broadcast late Tuesday, Jan. 10. He'll also make some dealer trips to a couple dozen cities to discuss the new pricing scheme.
"Dealers have been asking us to do this," LaNeve says. "They say we've got to build aspiration for the products and the brands."
LaNeve acknowledged customers are trained to look for big incentive sales, but he hopes in time consumers will learn that GM has "the best products at the best prices".
Chevrolet hopes to see short-term advantages off the Internet,. "[This pricing] will show cross-shoppers that Chevrolet has the best value and price."
The new ads will tell consumers they can go to third-party consumer site www.head2headedmunds.com and see that Chevrolet does have the lowest sticker prices, says Ed Peper, Chevrolet's general manager.
Ford Motor Co.'s goal is similar -- to have "attractive but not excessive incentives," according to Mark Fields, Ford's president of the Americas.
"We're not going to guess on what some of our competition is doing," Fields says. "We have to cut our own path."