General Motors Goes Regional With US Discount Deals

08 March 2005

Increasingly anxious to break the vicious circle of consumer expectations and high-ticket discounts on new vehicles, General Motors is to eschew national US discount promotions in favour of targeted regional deals.

Although the discount program is still active - and some of the deals sweeter than last year - the promotional packages now vary from region to region and model to model.

So far as GM is concerned, nationwide deals offering zero percent finance over five years are in a state of rigor mortis. Furthermore, the world's largest automaker has stepped-up cutbacks in production, signalling it is no longer prepared to countenance the accelerating erosion of profit margins.

GM North America is beset with high inventories and declining sales. Last month its share of US vehicle sales dropped below 25% - a nadir unequalled since the summer of 1998, when share fell to 21% after a lengthy strike halted production.

In the year to date, the auto behemoth's market share has failed to get within striking distance of the company's self-imposed target of 29% to 30%.

A current regional promotional ploy is to supply local dealers with coupons worth $250 (€189; £130) each. At dealers' discretion they can hand customers up to four coupons per vehicle sale.

This has prompted some savvy dealers to combine the coupons, put them toward specific vehicles, and run ads offering an additional $1,000 in addition to GM's regional rebates.

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