GM Bows to the Inevitable, Imposes Permanent Price Cuts

11 January 2006

General Motors on Tuesday unveiled a new pricing strategy attuned to what consumers are willing to pay - rather than continuing to hike prices to an artificial level then switching to Freddie Kruger mode as soon as buyers baulk.

The world's largest automaker by volume (maybe not for much longer given the rise and rise of Toyota) plans to trim sticker prices across the board on its top-selling Chevrolet brand, also on vehicles produced under the GMC and Buick marques.

Prices will also be cut on certain Pontiac and Cadillac models. In total, fifty-seven of GM's 76 brands will be offered at permanently lower prices

North American vp of marketing and advertising Mark LaNeve told a press conference that price cuts on qualifying vehicles will average $1,300 (€1,078; £737) with cuts of up to $3,000 on certain premium models.

LaNeve concedes that consumers are frustrated by trying to keep up with incentives. ''They say: 'Incentives are confusing and we don't want to figure it out'," he empathized. "[Repricing is] what our customers are asking us to do."

Short-term price cuts may be dead ...long live incentives!

LaNeve admits that GM's strategy isn't a sure-fire way to permanently eliminate limited period promo-pricing. "Incentive programs will not go away …part of the strategy [is] to get smarter and more efficient with our incentive programs."

Comments one media cynic: "Ladeez and Gents, you will observe that at no time do my fingers leave my hands ...!"

Data sourced from Wall Street Journal Online; additional content by WARC staff