GM and Ford Continue Price-Slashing on 2006 Models

03 August 2005

Volume and market share appear to be the name of the game, with two of Detroit's Big Three carmakers continuing to slash prices on their 2006 models with the same happy abandon as Freddie Kruger.

With the next year's models cascading into dealers' showrooms as of this week, General Motors and Ford Motor Company are offering a mix of reduced ticket prices on the new models plus improved warranties. Both firms declare they intend to take a "more targeted approach" to incentives.

Says GM's head of North American sales and marketing Mark LaNeve: "Given the intensely competitive automotive market, incentives will continue to play a role in GM's marketing strategy. However, the focus will be on the vehicle and the value it offers to consumers."

Ford intends to extend its Family Plan 'employee discount scheme' for a further month, even on some 2006 models. Both companies claim they are also enhancing product values with features such as more powerful engines and improved airbags.

Merrill Lynch analyst John Casesa, believes the GM and Ford price cuts are a step in the right direction, bringing more transparency and credibility to list prices.

However, he adds a rider to that opinion: "My concern is that the domestics will simply set a lower price to negotiate from. It will be difficult to avoid additional discounting."

Data sourced from Financial Times Online; additional content by WARC staff