DETROIT -- Chevrolet is ending its long-running "bonus tag" promotion that was unpopular with many dealers and confusing to some customers.
It's doing so after sales of the highly profitable Chevy Silverado fell for the fifth time in six months and with General Motors carrying the most inventory in nearly a decade.
For June, Chevy is switching to a strategy of giving uniform discounts on certain trim levels, including 17 percent off all LT versions of the 2016 and 2017 Equinox, Traverse and light-duty Silverado, a spokesman said today. Customers can elect zero-percent financing or lease subvention instead.
Chevy officials hope the new messaging will be simpler for dealers to communicate and for customers to understand than the tags, which were allocated each month to dealers, who then assigned them to individual vehicles.
"Some people have been very successful with them. Both the company and the brand have gained some pretty significant retail market share," Chevy spokesman Jim Cain said. But he said the uniform discount is based on the idea that "having a simple message to explain on the showroom floor can only keep the momentum going."
The bonus tags, launched last summer, often created a wide pricing disparity for similar vehicles, leading shoppers to look elsewhere when they wanted a certain color or feature. Dealers were not allowed to reassign the tags mid-month.
One dealer in the Southeast said he lost a customer in early May who wanted a gold Buick Enclave and didn't understand why it cost $4,600 more than an otherwise identical white one on the same lot.
"It's just like shooting craps at the casino," said the dealer, who asked to remain anonymous when discussing the program. "I couldn't sell them the gold one as cheap as I could the white one, so he left confused. He said, 'I don't understand.' The only difference was the color and the VIN number."
The bonus tag sales are continuing this month for the Buick and GMC brands, Cain said.
The change in incentive strategy comes after GM's U.S. sales fell short of Ford Motor Co. in May, the first time Ford beat its crosstown rival in more than a year. Ford's fleet sales were 80 percent higher than GM's, and GM remained well ahead of Ford on a retail basis.
GM's sales fell 1.3 percent last month overall, though retail sales were 0.4 percent higher than in May 2016.
GM's inventory rose for a sixth consecutive month. It ended May with a 101-day supply of vehicles, up from 100 days' worth a month earlier. Cain said GM remains on track to achieve its goals of cutting that to about 90 days by the end of June and close to 70 days by year end.
GM said it needs the extra inventory now because plant downtime related to several upcoming redesigns will reduce output by nearly 100,000 units in the second half of the year.
"We will continue to monitor the marketplace and will make additional production adjustments if needed," GM said in a statement.
Buick sales rose 29 percent, while Cadillac posted a 9.2 percent gain. Chevy sales declined 3.8 percent, and GMC was down 5.2 percent. On a retail basis, GMC was the only brand with a year-over-year decrease.
Year to date, GM's sales are now 1 percent lower overall and 0.3 percent higher at retail.
GM said commercial and government sales were up double digits in May, while less profitable deliveries to rental-car companies plunged 36 percent.
Sales of the Silverado declined 2.7 percent to 43,804, falling behind Fiat Chrysler's Ram pickup for the third month in a row. It was also the third consecutive month in which Ford's F-series pickup outsold the combined total of GM's Silverado and GMC Sierra.
GM has significantly pulled back on Silverado discounts in recent months, which partly explains the declining sales. But late-May estimates from the Power Information Network showed higher incentives on GM’s full-size pickups than on the F-series. Cain said GM is being intentionally less aggressive now because pickup demand tends to rise in the second half of a year.
"We should do very well with pickups" later in the year, Cain said.
The Chevy Bolt EV, whose gradual rollout has reached 14 states so far, had its best month to date, with sales of 1,566.