GM price cuts may not be a better deal

[Variance]

GM price cuts may not be a better deal

Strategy of consistent low prices leaves some vehicles costing more, Consumer Reports says.

David Phillips / The Detroit News

General Motors Corp.'s move last month to significantly slash prices on the bulk of its vehicle lineup is helping generate higher sales and more showroom traffic, but a new report says more than a third of the models affected may not offer buyers a better deal.

When GM cut prices as much as $2,500 on select 2006 models in January, or about 80 percent of its U.S. lineup, Consumer Reports studied prices on more than 500 of the automaker's cars and trucks before and after the move.

The magazine found that 64 percent of GM models now have lower sticker prices, with the average price cut of $2,000.

But on some models, such as the Cadillac DTS and some Buick LaCrosse sedans and Terraza minivans, prices were lower last fall during GM's "Red Tag Event."

The magazine subtracted dealer sales incentives, customer rebates and other adjustments from the dealer's invoice price to determine a "bottom line price."

Consumer Reports' analysis found that not all vehicles under the plan are priced evenly and that it can be difficult to make price comparisons based on brand or model.

In some cases, such as the Buick Terraza CX minivan, the lowest price available now is more than $4,000 above similar prices in October. Yet on some Buick Terraza CXL models with all-wheel drive, the lowest price today is $4,000 below October prices.

"The move away from extreme incentives to more consistent pricing will make it easier for consumers to make purchasing decisions," said Rob Gentile, associate director of Consumer Reports' auto pricing service. "But consumers need to research each model and trim line to ensure that the deal they negotiate is as favorable as it appears."

Combined with adjustments made at the beginning of the 2006 model year, GM says it has adjusted prices on about 90 percent of its car and truck models.

With its sales and market share falling in recent years, GM has struggled to reduce discounts and offer sticker prices closer to actual transaction prices.

When sales and traffic have slumped, the company has relied on promotions, such as 0 percent financing or employee-style discounts for all consumers.

GM's U.S. sales rose 6 percent in January, and the automaker credited the latest price cuts with drawing more traffic. The automaker is aggressively advertising the price reductions in print, TV and online advertising, but analysts say it will be a challenge to maintain momentum going into the spring selling season.

"GM is spending lavishly, in some cases overspending, to promote the lower prices," said Jeremy Anwyl, president of car shopping site edmunds.com. "The challenge will be to stick to the new prices and avoid returning to rebates, even if traffic trails off."

Since the price cuts, Anwyl said the percentage of online shoppers considering a GM purchase has tripled on some models.

GM resorted to the drastic price cuts in large part to win back consumers who increasingly start on the Web when shopping for a new car or truck. Many online sites don't include rebates and discounts, making many GM models appear more expensive than rivals, even when the automaker has offered discounts as high as $5,000 per model.

The latest price cuts average $1,300 per GM vehicle.

"We're giving consumers a compelling reason to try our new vehicles," GM Chairman Rick Wagoner said in a speech before the Greater Miami Chamber of Commerce on Friday. "It's the right move given the strength of our products and the right way to bring customers into the showroom."

Link: http://www.detnews.com/apps/pbcs.dll/artic.../602200356/1148

[ellives]

So what? Manufacturers change their prices all the time in response to demand, availability and product life cycle. Consumer Reports should look at Toyota's practices once in a while.

[regfootball]

F*C.K CR

they just continually pick away at stuff

'too many incentives'

ok, we'll drop the sticker price

'its not the same deal was when you had incentives'

ARRGGHHHHHHH

Edited February 20, 2006 by regfootball

[VenSeattle]

Reason #1 it was a good move:

Since the price cuts, Anwyl (edmunds.com) said the percentage of online shoppers considering a GM purchase has tripled on some models....

GM resorted to the drastic price cuts in large part to win back consumers who increasingly start on the Web when shopping for a new car or truck. Many online sites don't include rebates and discounts, making many GM models appear more expensive than rivals, even when the automaker has offered discounts as high as $5,000 per model.

Reason #2 it was a good move:

Resale Value.

[ellives]

Agreed. Price is one area that consumers are particularly saavy. They shop the web.

I've never really understood the resale value issue with GM products. I suppose it could be just a temporary issue as the market has shifted from GM to Toyota but I don't see this happening over a long period of time as consumers won't tolerate it forever and will eventually completely abandon GM. In the mean time I'm enjoying buying quality GM products that are 3-4 years old for cheap money.

Go GM!

Reason #1 it was a good move:

Reason #2 it was a good move:

Resale Value.

[balthazar]

There are no more Red Tag prices on the lots- you cannot receive that incentive anymore. The only validity would be to compare two current prices, not 1 current price and 1 long-gone price.

It's not much different than comparing 2006 prices to 1999 prices.

Comparing 'before & after' pricing is irrelevant.

Not unlike CR.

[Guest YellowJacket894]

Simply put, Consumer Reports should just stick with reviewing toasters and blenders. Their knowledge of testing cars is comparable with Dick Cheney's knowledge of how to properly fire a rifle at a non-human moving target.

Edited February 21, 2006 by YellowJacket894

[Newbiewar]

There are no more Red Tag prices on the lots- you cannot receive that incentive anymore. The only validity would be to compare two current prices, not 1 current price and 1 long-gone price.

It's not much different than comparing 2006 prices to 1999 prices.

Comparing 'before & after' pricing is irrelevant.

Not unlike CR.

technically a "supplier" can still receive the red tag sale, or supplier discount as it really was, or an employee can receive GMS anytime they feel... only difference is the average joe doesnt get it. but we still know what the price would be

[thegriffon]

So they're saying that "it's not a better deal, it was cheaper whenit was on sale"? Well duh. How is that any different to any other manufacturer or product? Would they complain that Coke isn't offering genuine value if they cut everyday prices 10% because it's cheaper when it's on sale? There is a special place in hell reserved for these people and their tort-lawyer backers.

[Chicagoland]

It is still too early to judge, I think.

[Snate]

Shouldn't CR be spending their time making up comparisons tests for Toyota to automatically win.

[FUTURE_OF_GM]

Well, here we go...

GM has a successful sales month with an ultra successful pricing strategy and the ANTI-GM media starts shooting articles at the "problem"

They'll kill this plan just like they do everything else in hopes that GM will fail.

But on some models, such as the Cadillac DTS and some Buick LaCrosse sedans and Terraza minivans, prices were lower last fall during GM's "Red Tag Event."

WOW!! Just WOW!!! Imagine that.... GM trying to charge a premium for it's LUXURY cars, and recently re-designed vehicles at that! Nice way to target the DTS success and 'nip it'

Consumer Reports' analysis found that not all vehicles under the plan are priced evenly and that it can be difficult to make price comparisons based on brand or model.

WOW!!! Another NO brainer.... More focused pricing for more focused divisions... I guess GM should just badge engineer everything and make it all the same prices so that the consumer can cross shop it's divisions... OH WAIT, the media doesn't like that EITHER.

Oh, and this is a nice way to contradict GM's promotion of simple, non-confusing pricing. CR is spreading the myth of confusion.

In some cases, such as the Buick Terraza CX minivan, the lowest price available now is more than $4,000 above similar prices in October. Yet on some Buick Terraza CXL models with all-wheel drive, the lowest price today is $4,000 below October prices.

I guess GM took a page from the Toyota book of manipulating the mix...It is after all a DIFFERENT PRICING STRATEGY. To not anticipate DIFFERENT PRICES is a little out of touch with reality in my opinion (Oh wait, it's Consumer Reports, NEVERMIND)

"The move away from extreme incentives to more consistent pricing will make it easier for consumers to make purchasing decisions," said Rob Gentile, associate director of Consumer Reports' auto pricing service. "But consumers need to research each model and trim line to ensure that the deal they negotiate is as favorable as it appears."

A.K.A. Live in the past and pray for incentives by NOT making your purchase decisions immediately, therefore forcing GM to offer them.

GM's U.S. sales rose 6 percent in January, and the automaker credited the latest price cuts with drawing more traffic. The automaker is aggressively advertising the price reductions in print, TV and online advertising, but analysts say it will be a challenge to maintain momentum going into the spring selling season.

And there comes that typicl Detroit pessimism again... "They can't possibly keep momentum, they're domestic after all.

"GM is spending lavishly, in some cases overspending, to promote the lower prices," said Jeremy Anwyl, president of car shopping site edmunds.com.

Oh GOD... Here we go.... Now it's going to be "GM is bribing people to buy it's cars through OVER ADVERTISING!"

Since the price cuts, Anwyl said the percentage of online shoppers considering a GM purchase has tripled on some models.

GM resorted to the drastic price cuts in large part to win back consumers who increasingly start on the Web when shopping for a new car or truck. Many online sites don't include rebates and discounts, making many GM models appear more expensive than rivals, even when the automaker has offered discounts as high as $5,000 per model.

So, basically they've been successful?!??!?!!

No credit... No surprise.

***I'd like to see a Toyota break down on prices... Or a break down of equipment verses prices. OH WAIT! It's CR and it's Toyota... We all know that Toyota is the righteous and angelic.***

As I said, this is just BAD PR for the sake of BAD PR to throw water on the fire (Not that 6% is much of a fire, but take no chances)... Something CR is really good at doing.

F*C.K CR

they just continually pick away at stuff

'too many incentives'

ok, we'll drop the sticker price

'its not the same deal was when you had incentives'

ARRGGHHHHHHH

It's not just C.R. it's the media in general and their attitude toward domestics...

Detroit CANNOT win either way, the deck is stacked and this is a PERFECT example...

"Don't buy GM!!! The rebates hurt resale too much!!!" then when the rebates end: "Don't buy GM, you're not getting THAT good of a deal!!"

All that's left now is an increasingly rapid slide towards bankruptcy.

as consumers won't tolerate it forever and will eventually completely abandon GM.

That's the plan

[ellives]

While not trying to defend Consumer Reports I think the gist of what they are saying is really a general indictment of ALL advertisers. They are, at their core, dishonest in some fashion. They leave information out, tell half-truths or otherwise twist the discussion in their favor. In GM's case with the price cutting, they are implying they've cut prices on ALL their products to which C/R is calling them out. Toyota does it with theirs by spouting statistics about their products but not actually comparing the numbers to any competitor, thereby leaving the impression the Toyota product is better when in fact it may not be or not enough better to be statistically significant. Toyota is especially galling because nobody ever calls them out on their methods which I find particularly deceitful. In the end, the US parts of Toyota are all really just sales and marketing people which we all know are just whores. They'll tell any story to anybody if it makes them a dollar.

Well, here we go...

GM has a successful sales month with an ultra successful pricing strategy and the ANTI-GM media starts shooting articles at the "problem"

They'll kill this plan just like they do everything else in hopes that GM will fail.

WOW!! Just WOW!!! Imagine that.... GM trying to charge a premium for it's LUXURY cars, and recently re-designed vehicles at that! Nice way to target the DTS success and 'nip it'

WOW!!! Another NO brainer.... More focused pricing for more focused divisions... I guess GM should just badge engineer everything and make it all the same prices so that the consumer can cross shop it's divisions... OH WAIT, the media doesn't like that EITHER.

Oh, and this is a nice way to contradict GM's promotion of simple, non-confusing pricing. CR is spreading the myth of confusion.

I guess GM took a page from the Toyota book of manipulating the mix...It is after all a DIFFERENT PRICING STRATEGY. To not anticipate DIFFERENT PRICES is a little out of touch with reality in my opinion (Oh wait, it's Consumer Reports, NEVERMIND)

A.K.A. Live in the past and pray for incentives by NOT making your purchase decisions immediately, therefore forcing GM to offer them.

And there comes that typicl Detroit pessimism again... "They can't possibly keep momentum, they're domestic after all.

Oh GOD... Here we go.... Now it's going to be "GM is bribing people to buy it's cars through OVER ADVERTISING!"

So, basically they've been successful?!??!?!!

No credit... No surprise.

***I'd like to see a Toyota break down on prices... Or a break down of equipment verses prices. OH WAIT! It's CR and it's Toyota... We all know that Toyota is the righteous and angelic.***

As I said, this is just BAD PR for the sake of BAD PR to throw water on the fire (Not that 6% is much of a fire, but take no chances)... Something CR is really good at doing.

It's not just C.R. it's the media in general and their attitude toward domestics...

Detroit CANNOT win either way, the deck is stacked and this is a PERFECT example...

"Don't buy GM!!! The rebates hurt resale too much!!!" then when the rebates end: "Don't buy GM, you're not getting THAT good of a deal!!"

All that's left now is an increasingly rapid slide towards bankruptcy.

That's the plan