GM Announces Price Cuts on 57 Models
{{#rendered}} {{/rendered}}General Motors Corp. (GM) on Tuesday announced plans to cut prices across a wide range of its vehicles as it tries to spark the struggling automaker's sales and diminish consumer expectations of additional incentives.
The world's largest automaker said the program will lower the manufacturer's suggested retail price (MSRP) by as much as $2,500 on some vehicles, but that the average decrease will be $1,300.
"We want it to be crystal clear that with or without incentives you're getting a great price," said Mark LaNeve, vice president of sales and marketing.
{{#rendered}} {{/rendered}}GM will lower prices on all Chevrolet, Buick and GMC vehicles and most Pontiac vehicles starting Wednesday, LaNeve said. Saab, Saturn and Hummer will be excluded because GM feels they are already priced appropriately, he said. In all, the cuts will impact 57 vehicle models in North America.
LaNeve said GM believes it will make money despite the markdowns because it has new products coming to market, and it will be spending less per vehicle on incentives, which have sometimes topped $4,000 per vehicle.
GM will be "more, let me say, judicious," but will still use dealer incentives, Chief Executive Rick Wagoner told reporters at the North American International Auto Show in Detroit.
{{#rendered}} {{/rendered}}The company plans to spend heavily on television and print advertising to tout the lower sticker prices.
Peter DeLorenzo, publisher of the closely watched industry Web site, Autoextremist.com, said the GM pricing decision will be extremely important for the company, which is launching numerous new models over the next three years.
"It's their last shot," DeLorenzo said. "They're in a twilight zone now ... This price-value stuff has to fly because after this they really don't have anything left other than another massive rebate campaign."
{{#rendered}} {{/rendered}}A GM employee pricing program, which allowed U.S. consumers to buy new cars and trucks at the price that GM employees pay, drove sharp sales increases last summer and prompted similar offers from Ford Motor Co. (F) and Chrysler (DCX).
"If anything, we weren't aggressive enough," LaNeve said.
Ford spokeswoman Whitney Drake said Ford has been moving its suggested retail prices closer to actual sale prices on new products because of on-line research by customers.
{{#rendered}} {{/rendered}}"We're looking at what (GM is) doing," Drake said. "We're not ready to say what we're going to do."
The latest moves to breathe life back into GM came just hours before a close aide to Kirk Kerkorian, the Las Vegas casino mogul who is GM's biggest individual investor, urged the company to step up efforts to staunch mounting financial losses.
Meanwhile, Jerome York, a former Chrysler and IBM executive, also demanded that GM conserve cash by cutting its $2 annual dividend.
{{#rendered}} {{/rendered}}GM stock was down 11 cents to $22.30 in afternoon trading Tuesday on the New York Stock Exchange.
The Associated Press and Reuters contributed to this report.