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June 17, 2005
GM's "Employee Price" Ads Pay Off So Far
It seemed desperate, but it may be paying off for struggling General Motors, at least in the short run. For a couple of weeks now, GM has been advertising "Pay what we pay...Employee Discount for Everyone," a campaign featurng GM employees telling the public that they can buy GM cars for the employee insider price.
J.D. Power and Associates (owned by McGraw-Hill, which also publishes Businessweek), says GM's market share during the first ten days of June is at 30.3% through the first 12 days of June.
The study shows GM grabbing share from the Chrysler group, which has lost more than two points, and Ford Motor Co. and Toyota, which have each lost more than a point. Honda, Nissan and Hyundai have lost smaller amounts of share, the Power study shows.
GM's share is up an impressive seven points from June 2004, and has not been above 30 percent for a month since September 2004,says Power.
The employee discount program "is substantially moving the needle for them," said Tom Libby, senior director of industry analysis at Power Information Network, a unit of J.D. Power and Associates. The PIN study is based on retail transaction data from more than 6,000 automotive franchises.
All that share gain comes at a price, though. Estimates are that GM is losing $2,500 per car selling at such deep discounts. And worse, GM has taken its training of consumers to wait until a bigger and bigger discount comes along before buying a vehicle to a new level. GM's immediate concern, though, is clearing dealer inventories of 2005 model year vehicles before the 2006 models start showing up in force in September and October.
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