Commentary

GM's Pickup Pricing: For Real Or 'Marketing Ploy'?

Thanks to the Internet and all, the auto buying process is getting more transparent for consumers, right? Well, a USA Today report last year effectively put the kibosh on that wishful notion by exposing the mumbo-jumbo that’s behind such seemingly important data points as “invoice price” — or the amount the dealer purportedly pays the manufacturer. And recent news reports out of General Motors certainly has this reporter’s head spinning about its pickup truck pricing. 

“After years of grooming customers to expect a few thousand dollars off sticker prices on even its latest models, General Motors Co. said it is shifting course and promising to shun lavish discounts when it comes to peddling its newest pickup trucks,” Jeff Bennett reports in the Wall Street Journal this morning.

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“We don't have to put our truck on sale to sell it,” Chevrolet global brand chief Alan Batey told Bennett in an interview yesterday in advance of the release today of October a sales report that is “expected to reflect the highest average sales price” ever at the automaker. “Whether we lose a couple of points of market share in a given month because someone is liquidating isn't our concern. We aren't going to get into that dogfight.”

Bennett talks to a GM dealer in Texas who seems to be sitting on the fence about the new policy because his prospective customers have been “sitting on the fence” about it. But GM has dispatched about 60 trainers nationwide to show dealers how to steer their pitches towards features and benefits and away from price.

But wasn’t it just a couple of weeks ago that the Associated Press’ Tom Krisher told us in the Seattle Times and elsewhere that GM’s “new twist” of raising its pickup truck prices in the U.S. was, according to industry analysts, “a marketing ploy”?

“They expect GM to raise incentives starting next month so dealers can advertise big discounts,” Krisher wrote, pointing out that GM's pickup sales dropped 8% in September while both Ford and Chrysler saw increases. “Customers will feel they're getting a deal — whether they do or not depends on the size of the discount.”

TrueCar.com analyst Jesse Toprak told Krisher that the new pricing policy “is really meant predominantly as a sales closing tactic for dealerships” and that “savvy customers know how to look beyond this and go to net pricing.”

Whoever those savvy customers may be. As USA Today’s James R. Healey, Chris Woodyard and Fred Meier wrote in the lede of their story about car buying last year, “It's nearly two decades into the age of Internet car shopping, but despite the information explosion, most buyers don't have a clue.”

And as Bennett points out high up in his piece today, the 2014 sales season is just getting going. “Analysts say GM can afford to be tightfisted now but may not remain so as competition increases,” he writes.

In writing that GM had raised the prices of its Chevrolet Silverado and GMC Sierra pickup trucks by up to $1,500 on Oct. 11 after it “previously indicated it would keep prices the same for the redesigned 2014 trucks in order to aggressively market the new models,” Fox Business’ Matthew Rocco reported that “top U.S. automaker will offer as much as $1,500 in cash-back incentives to help offset the price increase” through the end of October.

Does that leave you scratching your head, too? 

And if GM is serious about staying out of the discounting “dogfight,” how do we account for such recent headlines as:

  • “GM sweetens military discount for Buick, Chevy and GMC” (AutoBlog, Oct. 6)
  • “GM adds aunts, uncles to enhanced employee-pricing program,” (Automotive News, Oct. 2)

Meanwhile, USA Today’s Fred Meier reports that the Treasury Dept. has booked a $9.7 billion loss on the $49.5 billion bailout of General Motors. In its latest quarterly report to Congress, it says it has reduced its stake in the company to 7.3% by divesting its all of it preferred stock and most of its common stock but the latter has all been below its break-even price. 

Now there’s transparency.

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