I seriously want to scream everytime I get in this hypothical conversation....

That being said....I wonder how many buyers GM looses simply because they do not understand the system? I know GM relies on the shock and awe of dealer commercials offering $10K off to move cars...but now that every domestic dealer is seemingly doing that...it almost blends in. Plus people are skeptical of dealers and anything the offer by nature.

Either way, just a thought

 

Yes I 100% agree. SUVs Trucks are even worse. My uncle was like $41K for an Avalance too expensive for me.

Me: you can get one for $33K ater rebate and what not.

Sticker shock scares so many people, then huge rebates make them look bad. Import XXX doesn't need a $3000 rebate to sell.

Plus it looks bad in Magazines when they compare cars by MSRP, it makes GM cars look like a bad value.

 

i see exactly how it works
while i may not agree with it all the time, take this real life scenario...

i was talking to one of the contractors that gets us some jobs and he sees OUR new chevy van
"you finally broke down and got a new truck?" -> him
"yea, needed a new one and the rebates really sold us along with dodge killing their work van"
"yea, we just bought an avalanche. got it for 11k off the sticker. that's like driving a fully loaded truck for the price of a stripper. it's one heck of a deal"

so to some people's surprise, the strategy doesn't fail as quite often as one may be led to believe

 

The thing is though...after rebates, GM''s prices are merely competive. You are not driving a loaded Avalanche for the price of a stripper...you are merely driving a loaded Avalanche at the price it should sell for in the first place.

You find that out in resale. For instance, our LOADED Trailblazer stickered for $42K (we did not pay that). In 5 months, it has lost almost half it's value between sticker (Blackbook is $21K). That is much higher depriciation that a import. However, then if you consider that the buyer likely payed $31K for the Trailblazer, not $42K...the depriciation issue looks much better. It is another one of those thinks that people always skew for the imports.

Now the question is...what would happen if GM scrapped rebates and listed the MSRP at the real selling price? Would the vehicles instantly depriciate more...or would they stay at the same price levels?

 

That's a very good point. I read somewhere (can't remember the source) that said that when comparing resale value to the actual transaction price, which of course is the real measure, that GM's cars are only a few points behind the imports.

It'd be a mix. At a certain point a car's value is based solely on its instrinsic value (regardless of what it cost xx years ago when new), but when a used car is not as old, it's based partly on how much of a discount the market demands for the perceived downside of not having the comfort of a new car and its warranty.

 

That's the thing though. It's not the customer's job to "get it".

GM is burning itself both ways....customers who look at MSRP think the car is overpriced, and the customer looking at the ZOMG HUGE REBATE! thinks: why does this car need a huge rebate to sell? If I buy an Accord they don't give me a rebate, there must be something wrong with this one for them to knock so much off of the price.

And as is said there, it makes the depreiciation and everything else look much, much worse. GM needs to stop being stupid and just sell cars at what they're worth. It's like some bean counter somewhere is holding out hope that one day they'll be able to get rebates, charge these inflated MSRPs and rake in the profits. Never gonna happen, and GM needs to realize that and just lower it's MSRP's to be competitive.

People don't LIKE haggling with dealers. They HATE it, that's why stuff like Saturn and Scion have a draw on the whole pure pricing angle. A rebate? That's just more hassle, uncertainty and stress in the already stressful car buying process. Give the customer one number, one price, this is the price, it's a good one, enjoy your car. Not this "Oh let me speak to my manager.....good news, we're lowering the price to something competitive!" Customers hate that.

For every customer who says "weee I got a great deal 10k off of my new Avalanche!" I can bet you there are 2-3 who said "I don't want to hassle with all of that, I'll just go buy the car that's cheaper to start"

GM's cars are at a disadvantage in the market. People perceive them to be of a lower quality than their competition, and looking at MSRPs in magazines or online they are more expensive as well. Why is this customer going to even give that car a CHANCE? Is an already skeptical customer going to want to go haggle over a Grand Prix when he can get the Accord, the car with the better reputation, with no hassle?

The stupid thing is GM even has an entire brand that gets it right by nature, but they can't seem to do it across other brands.

 

People have to be really serious about buying a GM car to dig and estimate the transaction price. I bet a fair number of people who are "somewhat interested" just see the MSRP listed on some web site, magazine, or on the dealer lot and think...oh, I guess this car is a little expensive. For that money, I'd rather have a ____.

I was reading in car and driver the other day... they had a G6 (a Grand Am!) in there for $29K and change. It wasn't even loaded. Who do they think they are kidding.

 

Ford is the one who cleans house on price dropping!!

They always drop 3 or 4K off the sticker right off the bat...

 

Not anymore. They are getting away from that. GM is the worst one for it now.

 

29k G6 not loaded? I belive a loaded G6 costs around 28k, and that is with Panaramic sunroof, and every other goody.

I agree that GM needs to do one of two things
1- Use the money that is on the hood to add more gizmos and such to the car to make it more attractive as well as make it beyond better then whats out there
2- drop MSRP.

I aslo was talking with a co-worker who used to be a Toyota salesman. We got to talking about depreciation of identical cars such as the Corolla/Prism and Matrix/Vibe. Both cars IDENTICAL, yet because there is a big fat T on the hood of the Toyota's, they are a better value then the "domestic" versions. Why? How? I dont understand? Can just the name alone destroy the value of a car?
If so, THAT is what GM needs to fight.

 

I know if I was looking at a new car (just looking cuz I'd prob never waste the money on a new car), and I saw that a GM car's MSRP was $5,000 more than another car but had rebate. And the other car was a "flat no haggle" price. I'd prob lean towards the non-GM car.

But I'd prob never buy a new car, so who cares what I think...but I can tell you that all of this high MSRP price with talk of rebates, isnt going to persuade me to get into the dealer to look at a new car.

 

How about this novel idea. Lower the MSRP and do away with rebates and all the bull****!

 

.... and **** off just about everyone who bought your car over the last 3 years.

Not good for return buyers.

 

Because deprciation also factors in the demand for that used car. There is a higher demand for used imports because of their perceived reliability. Also, my wifes vibe cost about 4 grand less then the exactly same equiped matrix. By the way, anyone ever try to deal at a Toyota or Honda dealership? They add thousands of dollars worth of accessories to the cars as soon as they come in and expect you to pay for them. They wont deal on the price greater then a few hundred dollars. The only Japanese maker that I feel deals fairly is Nissan.

 

They will never lower MSRPs on existing models, but what they can do is not rasie the MSRP from year to year. Or offer new option packages that make the cars cost less than previous equally equiped car.