Discounts Trigger $1,227 Loss on Each GM Car Sold

30 August 2005

The planet's largest carmaker lost $1,227 (€1,002; £681) on each and every vehicle sold in its US home market and Canada during the year's first half.

Although General Motors has been heavily discounting on 2005 lines in an effort to shift stock before dealer lots are clogged with 2006 models, the hemorrhage is due as much to retiree costs as it is to consumer concessions, reports researcher Harbour Consulting.

Explained Harbour vp Laurie A Felax to an automotive conference on Monday: "GM has two to three people sitting at home for every single person working today, and that has a huge legacy-cost impact on them. It wipes away any profit that they have."

Ford Motor Company followed GM into the red, albeit with a much lower loss of $139 per vehicle sold. "Chrysler was the lone Detroit automaker to make a profit per vehicle," said Felax, adding that it averaged a meager $186.

As if to rub salt into an open wound, the Nipponese Big Three - Toyota, Honda and Nissan - all topped profits of over $1,000 a unit in the North American market. Nissan averaged $1,826 a vehicle, Toyota $1,488, and Honda $1,203.

Data sourced from New York Times; additional content by WARC staff