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Despite cuts, GM still leads incentive spending Whitacre plans to focus on reducing vehicle discounts


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Despite cuts, GM still leads incentive spending

Whitacre plans to focus on reducing vehicle discounts

Robert Snell / The Detroit News

General Motors Co. slashed the amount of discounts slapped on the hoods of vehicles last month but still led incentives offered by Detroit's Big Three automakers, who spent a combined $1 billion in January, research shows. GM spent an average $3,103 on incentives per vehicle in January, $721 more than the industry average, with the biggest expense coming from peddling castoff brands Saturn and Hummer, according to consumer Web site Edmunds.com.

GM Chairman and Chief Executive Officer Edward Whitacre Jr. has complained that GM spends more than other automakers and said reducing that expense was among his top priorities. In December, the month Whitacre assumed CEO duties following Fritz Henderson's forced resignation, GM outspent the next closest competitor, Ford Motor Co., by almost $1,000.

Automakers have relied on costly incentives to maintain or grow market share, but GM wants to wean itself off the "incentive drug," said Susan Docherty, GM's vice president of sales, service and marketing.

"We want to make sure as we look forward, that we're using incentives on a judicious basis," she told reporters and analysts this week.

One example: GM unveiled a $1,000 incentive late last month to convince Toyota Motor Co. owners to trade in their Japanese model.

"January incentives were not particularly generous or compelling -- until some automakers began trying to conquest unsettled Toyota owners and shoppers late in the month," said Jessica Caldwell, director of industry analysis for Edmunds.com.

Despite the Toyota offer, GM cut incentive spending by almost $900 per vehicle from December, far above the industry-wide average decline of $160, according to Edmunds.com.

"We think we kind of bucked the trend," GM spokesman Tom Henderson said.

GM's average incentive costs in December -- $4,001 per vehicle, was unrelated to Fritz Henderson's resignation and any effort to boost GM consideration at a time of executive upheaval, Tom Henderson said.

GM spent more on incentives in December -- including offers of zero percent financing and cash deals -- to clear out 2008 and 2009 models and vehicles made by brands being sold or eliminated as part of the Detroit automaker's restructuring.

Hummer vehicles had the largest discount industrywide at $5,733 last month while the Mini brand had the smallest at $226.

Incentives on Saturn and Hummer were the highest in relation to vehicle prices. The discounts totaled 18.4 percent of Saturn sticker prices and 15.2 percent of Hummer prices, according to Edmunds.com.

Since May 2009, GM has sold 99 percent of its Pontiac and Saturn vehicles and 83 percent of Saab models. There were almost 2,500 Hummer vehicles remaining at the end of January.

Automakers spent an estimated $1.67 billion on incentives last month, down 35.9 percent from a year earlier, and Detroit's Big Three accounted for 60 percent of the total amount.

Domestic automakers spent an average $3,108 on incentives per vehicle in January, down $291 from December.

European automakers spent an average $2,611 while Japanese and Korean automakers spent $1,563 and $2,096, respectively.

From The Detroit News: http://www.detnews.com/article/20100204/AUTO01/2040349/1148/Despite-cuts--GM-still-leads-incentive-spending#ixzz0eZgWJY1c

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