http://www.detnews.com/2004/autosins.../A01-26404.htm

 

when you cars are that bad it should tell you something. there's something that people are attracted to and your cars don't have it. maybe its price, warranty, styling. whatever it is GM needs it.

 

Instead of a $3000 rebate GM should....

● Lower the MSRP $1000 (high stickers scare window shoppers)
● offer $1000 rebate (people are so used to rebates you can't get rid of them entirely
● and up warranty to 5yr./60,000mi. bumper to bumper. (many still feel US cars aren't built as well even though that is no longer true, this give them peace of mind)

 

It's worse than $3000. According to the article, GM is spending an AVERAGE of $5000 PER VEHICLE to move them.

This is absolutely breathtaking in the depths of its stupidity.

With 5K per car, GM could:

1. Reduce sticker prices to the point where people HAVE to notice them. As in HUGE price advantages for EVERY car. If you really want to take back market share, this is what you do. Period. You don't dance around it. You don't price the damn cars a few hundred less than the competition. You cut them off at the knees, so the price advantage is so clear a five-year-old could figure it out.

2. OR dramatically increase the quality of cars to the point where the wasn't any competition. Imagine a Cobalt with another $2.5K in quality content (not electronic doodads to impress the people who want to drive their living room, but REAL quality). Imagine a Cadillac with $10K more. That's probably what the $5K per car averages out to.

3. Or do both.

But no. The beancounters win. Shoot them, GM, and do us all a favor.

 

The longer incentives stay around, the longer this perception of far lower quality stays.

 

Saturn is the first to cutback on the incentives and is now offering an upgraded 5 year/ 60,000 warranty instead (worth about $1,400).

 

In Canadian dollars, using GM and Toyota's build your own websites, configured to be as close a possible in equipment, MSRP on a Vibe is $30,000, MSRP on a Matrix is $27,000. This leads to the assumption that GM has a 10% cushion built into the MSRP on all their product. This considered, it seems reasonable to expect a pile of cash on the hood to make a deal on a GM.

 

Asian car companies are averaging $888 in incentves per vehicle while GM is averaging $4300 per vehicle.

Yet GMs market shares is dropping while the Asian car market place is gaining..

GM needs to sell what people want, get better styling, be able to produce a new car quicker, needs better inteior quality, and needs a higher standard warranty.

 

Precisely!

Let's estimate that GM's portion of this is about $25B (with a "B").

And let's say they wanted to continue giving away half of that in incentives, (about $2,500 per car), and take the rest (the other $2,500 ), to improve their product.

Lemme see.....

I've heard some designers say, that the difference between a great interior and a mediocre interior is about $200. Let's be generous and give every GM vehicle a complete interior makeover....let's splurge...and add $250 to every GM vehicle's interior.

On a FWD car, the difference between a MacPherson strut suspension and and double wishbone/multi-link suspension is probably $300-$400. Again, let's splurge and spend $500 for a world class system with premium components like top of the line shocks, springs and bushings....for every GM car, including Aveo.

Ok how much money is left? Probably around 10-11 BILLION, (and that doesn't include the $12.5 BILLION ...Yes, again with a "B"....that we still want to give away as rebates).

That's enough money for alot of stuff.

You could make the healthcare/retiree issue disappear.

You could build a bunch of new plants.

You could buy another auto maker (or even a small country).

You could develop 10-12 ALL NEW architectures.....from scratch!!!!!!! Or maybe 20 or 30 if Holden does them.

And if you had cars that people actually wanted to buy.......

You could re-invest the other $12.5 B (with a "B"), because you may not have to PAY people to buy your dull, mediocre cars.

And you're telling me that GM can't come up with afew hundred million to develop the Beta platform so we can finally get a real Camaro?????!!!!!

 

That's starting to sound like too good an idea. Common sense will never work!

 

Another thing to consider about the massive incentives that are used on most American make cars is the effect they have on perceived depreciation.

Ask just about anyone and they will tell you that American cars don't hold their value well. One of the biggest reasons for this perception is the rebates or financial considerations.

If a Chevy 1500 series pickup has a msrp of $20,000 and they are offering a $4500 rebate on it, not to mention, most domestic trucks sell closer to cost than to MSRP. Let's say the consumer paid $500 over invoice (saved an additional $1500). That means that the truck actually cost the consumer $14,000+tax, etc... When they calculate depreciation, what number do they base it on... That's right... MSRP!

SO it could be said that this truck depreciated 30% before the first owner ever bought it.... Once the truck is titled (driven off the lot) it depreciates a bunch more...

Is it any wonder the perception of domestic brands sucks... Make the rebates go away and price them where they need to be to be competitive...

 

Z284ever

 

:werd:

 

I have a car and a truck to show for it


I've also noticed that the Japanese sell very close to invoice, and their MSRP's are not much above that. They don't similar discounts and their cars are priced higher...and their sales are growing.

I think they are supplying the current need for cars: high volume/production and low cost. The Japanese are selling premium cars. Two other factors. First, American cars are usually rentals, especially when new. They are seen everywhere and many people can buy a year older model and be content. Second, there is a high turnover rate with new domestic car owners. We are more likely to sell them, and sooner, than imports.


This doesn't make economic sense to me, since you'd think the Japs would be more in tune with high volume/production and we'd be more custom/elite but its the way it is. I'm fine with it. I'd rather buy a lower priced domestic and use the price difference to pimp...i mean...customize my ride.

 

It sure does sound good in a totally idealistic, simplistic business world. I don't have a PhD in business and I'm guessing you don't either, so I would imagine that if it was just that simple GM would've ended rebates and done business this way a looooong time ago. Where's Red to explain the numbers to us?