GM Employee-Discount-For-All Promotion Fails to Lure Import Buyers

GM May Pay Price for June's Success through Lower Future Sales

General Motors Corp.'s U.S. division experienced a 47 percent increase in sales during its June Employee-Discount-For-All promotion, but

GM's U.S. division experienced a 47 percent increase in sales during its June Employee-Discount-For-All promotion. (Photo: Trevor Hofmann, Canadian Auto Press)

at what cost? According to information released Tuesday by the Power Information Network, part of the J.D. Power and Associates group, most of the customers who took advantage of the deal last month were already in the GM pipeline to purchase a new vehicle, and just chose to buy earlier because of the lower price.

While the immediate boost of cash has without doubt been beneficial for GM and its dealers in the short term, which were able to clear about 200,000 units of excess 2005 model year inventory in the U.S., over the long haul it is possible that sales will suffer.

The Power Information Network report stated that 63.1 percent of GM's June trade-ins were GM models,

While the immediate boost of cash has without doubt been beneficial for GM and its dealers in the short term, over the long haul it is possible that sales will suffer. (Photo: Alexandra Straub, Canadian Auto Press)

just below 64 percent the month previous. Therefore, any increase in "conquest" sales was not achieved.

"I would have expected them to have a higher conquest rate," commented Tom Libby, Senior Director of Industry Analysis for the Power Information Network. "It's a very mild degree of conquest."

But GM's execs don't agree, saying that its internal data shows that conquest sales from rival automakers rose by 50 percent in June, when compared side-by-side with "less aggressive" incentive campaign previously used.