Note to General Motors: employee pricing won’t work this time around
Posted by: in Marketing and AdvertisingFiled under: General Motors (GM), Marketing and advertising
General Motors Corp. (NYSE: GM) is in such dire straights that it said Tuesday it is bringing back “employee pricing” to almost its entire 2008 auto lineup. We’re not speaking a few Chevy models here, but all GM models save a few truck ones. Like Doug mentioned this morning, the automaker is in a deep funk and it’s doubtful that any incentive like the previous employee pricing ruse will help.
So, what’s an alternative? If it costs the automaker more to have bloated, non-moving inventory sitting on dealer lots, how about forgoing the employee pricing schtick and giving away slow-selling models at cost? Not invoice, but cost? Sounds audacious, but these are audacious times in the auto industry. GM is even giving away employee pricing on a handful of 2009 models. That’s great, but 2008 models need more extreme measures. Customers, after all, don’t exactly have the best perception of U.S.-made cars this year.
In general, employee pricing is 10% less than the invoice price of a vehicle. GM will need to cut deeper than that to reach out and get its glut out of dealer hands and into the hands of customers. Nothing speaks to the average American consumer like a cheap price — nothing. The employee pricing incentive was very popular in 2005 when it was offered to all consumers, and it even caused the competition to roll out similar pricing. This time, GM needs to get innovative and unveil a new, superior concept if it’s serious about moving inventory — even SUV inventory.
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