Will Employee Pricing Programs become Annual Events to Clear Bulging Inventory? |
| The majority of buyers taking part in GM's employee pricing program were merely trading up from their GM vehicle to a new one. (Photo: Trevor Hofmann, Canadian Auto Press) |
With General Motors Corp.'s U.S. division having experienced a 47 percent increase in sales during its June "Employee-Discount-For-All" promotion, and the other two of the Big 3 introducing similar programs of their own at the start of July, Ford's being the "Family Plan" and Chrysler Group offering "Employee Pricing Plus", what is the overall effect?
According to the Power Information Network, a division of J.D. Power and Associates that analyses data on sales of new and used vehicles from more than 6,200 auto dealers, this latest incentive program is working just as well for Ford Motor Co. and Chrysler Group as it did for GM. This, of course, makes a great deal of sense, being that the majority of buyers taking part in GM's employee pricing program were merely trading up from their GM vehicle to a new one. While selling a higher percentage of new vehicles to customers that would most likely purchase the same vehicle for a higher price at a later time might negatively affect future sales and profits, the "one bird in the hand is better than two in the bush" philosophy might reduce the Big 3's attrition rate to import manufacturers, at least over the short term.
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| After the first 15 days of sales, Chrysler Group increased its stake to 12.5 percent. (Photo: Rob Rothwell, Canadian Auto Press) |
But the short term might be all GM, Ford and Chrysler Group needs to get their messages out about improved quality to future buyers, and give time to bring more exciting designs that offer greater performance with improved fuel economy and lowered emissions to market.
But no matter what the future outcome, during the first 15 days of sales the Big 3 have accumulated a total of 62.4 percent of all retail new-vehicle sales, said the Power Information Network report. That equals an increase of 2.6 percent within the first two weeks of July, and reports from dealers that showroom traffic has increased.
