Desperately hoping to slash profit-gobbling incentives by bringing sticker prices in line with what customers actually pay, General Motors will announce a virtually across-the-board price cut on Tuesday morning, company officials confirmed for TheCarConnection.com.
Company sources declined to provide specific details, though on the whole, the cuts are expected to amount to about $1000 or so on a typical GM product, or in the range of four to five percent. The precise figure will vary depending on individual models. Hot products, like the Chevrolet Corvette, should see little if any reduction, but prices will tumble more sharply on slow-selling models, like the Pontiac Grand Prix.
The automaker has been trimming back on the price of new and redesigned models, such as the Chevrolet HHR, Pontiac Solstice and, on Monday, the updated Chevy Tahoe. This so-called Value Pricing is meant to reflect the reality of the market, GM marketing director Mark LaNeve told TheCarConnection.com during an interview last week. It reflects the gap between what GM puts on its window stickers and what customers actually pay. The gap is filled in by incentives and dealing at the showroom. That not only costs a lot but also damages the GM brand's image, LaNeve admits.
The announcement on Tuesday could be seen as "Value Pricing II," suggested Dr. David Cole, director of the Center for Automotive Research, in Ann Arbor, Mich. The "$64 billion question," Cole cautioned, is whether the strategy will work. The real danger is that even after cutting prices, customers will continue to demand hefty rebates and other incentives. If that happens, it could make it even harder for the troubled auto giant to regain its footing.
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