GM to Offer Employee Discount to Everyone

General Motors is attempting to compensate for stagnant sales by offering “employee discounts” to all customers.

GM to Offer Employee Discount to Everyone (AP)

In an attempt to boost sluggish sales, General Motors Corp. said Wednesday it will offer the same discount it gives to its employees to anyone who buys a new GM car or truck in the next month. The program includes all GM vehicles except the Chevrolet Corvette and GMC medium duty trucks, the world’s largest automaker said. The offer runs June 1 to July 5.

“We want to bring the focus back to what drives our business: great cars and trucks,” said Brent Dewar, GM North America’s vice president of marketing and advertising. “This program gives everybody a chance to drive the vehicles we drive and pay the price we pay.”

GM said the new price will be prominently displayed on vehicles at dealerships. Consumers can get additional incentives on top of the lower prices, said Paul Ballew, GM’s executive director of global market and industry analysis. Ballew said in some cases, consumers could get up to $7,000 or $8,000 off the standard retail price of the vehicle.

While the “employee discount” terminology is an interesting marketing gimmick, this is a slap in the face of GM’s work force. Unless employees will now get their discount on top of this one, GM has effectively taken away one of the major perks of working for the company.

More importantly, this has some interesting business ramifications. If there’s so much markup on their vehicles that they can profitably sell them for $7000 to $8000 less than their current price, no wonder they’re having trouble generating sales. And won’t this clue customers into that fact and thus create a demand that the prices be lowered permanently? If vehicle prices effectively rise $7000 to $8000 on July 6th, why would people be willing to pay the difference?

FILED UNDER: General
James Joyner
About James Joyner
James Joyner is Professor and Department Head of Security Studies at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. JACK ARMY says:

    I think this discounting is less of a slap in the face than a bunch of pink slips will be.

    I do agree with you that the huge mark-ups are about to be reduced for a long period of time.

  2. FredW says:

    I would guess the $7000-$8000 number comes from a fully loaded top of the line Cadilac or Hummer. The markup and cars that most people buy is decidedly less. In fact, for many dealers (don’t know GM as well as others) the service dept is the main breadwinner.

  3. RYAN C says:

    I have been in the retail automotive business for 20 plus years and I have never seen a factory scramble so hard and fast as this—what happens to the used vehicle market now? The used 04 you have in your driveway is now worth $3500 less than it was yesterday and the in-equity that is also in the same driveway also increased. The retail customer can not afford to own a late model vehicle anymore.