honoluluadvertiser.com

Sponsored by:

Comment, blog & share photos

Log in | Become a member
The Honolulu Advertiser

Posted on: Saturday, July 2, 2005

Discount program boosts GM

By Sarah A. Webster
Detroit Free Press

DETROIT — General Motors Corp.'s wildly successful campaign to offer employee pricing to everyone catapulted the automaker out of a months-long slump in June, sparking a nearly 50 percent jump in vehicle sales.

A Cadillac Escalade SUV on Thursday displayed a sign advertising GM's June discount program. The incentive helped boost the automaker's sales to its highest monthly total in nearly 19 years.

Reed Saxon • Associated Press

The program was so popular that the Auburn Hills, Mich.-based Chrysler Group announced plans to join in the latest discounting war next week, and the Free Press has learned that Ford Motor Co. is preparing to do the same.

Ford told managers earlier this week that it, too, would match the GM program if GM announces it will extend it past the Tuesday expiration date, according to a manager who asked not to be named.

GM reported yesterday that its sales for the month were up 46.9 percent in June compared with the same month a year ago — an amount that surpassed even high expectations and drove industry-wide sales close to 1.7 million cars and trucks.

GM sold 550,829 vehicles in June, capturing 32.8 percent of the U.S. market during the month, largely on the strength of its pickups, SUVs and minivans. The automaker had to search back to September 1986 to find a better month.

The performance brought some relief to GM and its dealers, who faced inventories of 1.2 million cars and trucks, despite cutbacks at assembly plants.

"It was an act of desperation, and it worked," said Art Spinella, president of CNW Marketing Research in Bandon, Ore.

But the success is creating pressures for GM to continue offering it and for competitors to match it. While GM won't comment on its future plans, it is widely expected that the automaker will continue the promotion through the end of July.

Sales of the Chevrolet Silverado pickup were up 110 percent compared with June a year ago, hurting the Dodge Ram, which was down 17.1 percent, and the Ford F-Series, down 3.3 percent.

Gary Dilts, of the Chrysler Group, said the company will do a similar discount program beginning Wednesday, after its sales failed to keep pace with the industry last month.

DaimlerChrysler AG reported sales were up 5.1 percent compared with the same month a year ago. Dilts noted that because the Chrysler division, whose sales were up 5.2 percent, did not keep pace with the industry sales gain of 15.9 percent in June, it would respond.

June was the first month this year that Ford posted a sales gain. However, it was a small 0.7 percent and did not keep pace with the industry, so that automaker also is under pressure to match GM's program.

Nissan Motor Corp. was the only major automaker other than GM to outperform the industry gains for the month, with a sales increase of 18.8 percent. Toyota's sales rose 14.4 percent and Honda's rose 8.9 percent.