GM plan for selling more SUVs

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GM offers gas-price cap for SUV buyers By DEE-ANN DURBIN, AP Auto Writer Tue May 23, 11:00 PM ET

Aiming to capitalize on consumer angst about the high cost of gasoline, = General Motors Corp. on Tuesday said it would cap pump prices at $1.99 for = customers in California and Florida who buy certain vehicles by July 5.

One hitch to the promotion is that customers must also agree to enroll in = the OnStar vehicle diagnostic service, which is free for the first year = but after that will cost $16.95 a month. The other is that many of the = eligible vehicles are serious gas guzzlers.

The offer is good for 2006 and 2007 model year vehicles. In California, = eligible vehicles are the Chevrolet Tahoe and Suburban sport utility = vehicles and Impala and Monte Carlo sedans; the GMC Yukon and Yukon XL = SUVs; the Hummer H2 and H3 SUVs; the Cadillac SRX SUV; and the Pontiac = Grand Prix and Buick LaCrosse sedans. In Florida, eligible vehicles are = the Impala, Monte Carlo, Grand Prix and LaCrosse.

Customers must buy or lease an eligible vehicle between May 25 and July 5 = and enroll in the OnStar diagnostic service, which automatically runs = checks on the vehicle and sends e-mail notices to owners each month.

Each month for one year, GM will give drivers a credit on a prepaid card = based on their estimated fuel usage. Fuel usage will be calculated by the = miles they drive, as recorded by OnStar, and the vehicle's fuel economy = rating.

GM will credit drivers the difference between the average price per gallon = in their state and the $1.99 cap. The credits can be used through December =

2007. Consumers wouldn't get any credits if gas prices fall below $1.99.

GM said a California resident who buys a 2007 Chevrolet Tahoe and drives =

1,000 miles per month would get an estimated $103.75 monthly credit, based = on the current average premium fuel price of $3.65 per gallon, GM said. A = Florida resident who drives a 2006 Buick LaCrosse about 1,000 miles per = month would get an estimated monthly credit of $60 based on the current = premium fuel price of $3.19.

GM spokeswoman Deborah Silverman said GM picked California and Florida in = part because the company wants to increase sales in those states. = Silverman said GM will see how successful the program is before deciding = whether to expand it to other states.

GM's newly redesigned full-size SUVs like the Tahoe have been big sellers = this spring despite rising gas prices. In the first four months of this = year, Tahoe sales were up 36 percent. The rebate could help older, = slower-selling SUVs like the Hummer H2, which saw sales fall 19 percent in = the same period.

GM's car sales were down 12 percent through April. While some cars have = bucked that trend =97 Pontiac Grand Prix sales were up 24 percent =97 the = rebate could help stragglers like the Buick LaCrosse, which saw sales fall =

21 percent.

After years of watching customers focus on their deals instead of their = vehicles, GM has been cutting back on incentive spending in favor of lower = overall pricing. In April, the company lowered per-vehicle incentives by =

26 percent to $2,836, the biggest drop of any U.S. automaker.

Silverman said the new program isn't straying from GM's strategy. The = automaker has always said it would continue to use targeted incentives to = focus on particular vehicles or regions, she said.

GM shares rose 4 cents to close at $24.48 on the New York Stock Exchange.

Reply to
badgolferman
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Aiming to capitalize on consumer angst about the high cost of gasoline, General Motors Corp. on Tuesday said it would cap pump prices at $1.99 for customers in California and Florida who buy certain vehicles by July 5. [snip] [end]

Doesn't quote in OE, either...

In any event, anybody think this is a good idea? The path to profitability for GM? Energy security for the US?

I'd think their competitive position would be enhanced if their vehicles just got better fuel economy and then they could skip this foolishness.

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Reply to
DH

If you search the CAFE guide you will discover GM offers more vehicle in the US, that get over 30 MPG, than does Toyota. GM even offers a car with a V8 engine that gets over 30 MPG. They all sell for less than their Toyota competitors vehicles, to boot. That is one reason GM sells millions more of its vehicles annually than does Toyota. ;)

mike hunt

Reply to
Mike Hunter

They also all look like furniture on wheels.

Reply to
larry moe 'n curly

How about: a way to unload their stocks of suddenly-slow-selling large SUVs, and to keep the production lines moving enough to maybe prevent the layoffs of thousands of workers who have to feed their families? In that respect, it sounds like the path to, if not profitability, then at least to the minimization of loss.

So yes, I think it's a _great_ idea. It evinces a certain agility of thinking that's uncharacteristic of corporations of GM's size.

I rather doubt that energy security for the U.S. hinges on anything General Motors does or doesn't do, don't you? :->

I mean, really now.

GM's responsibility is first and foremost to its stockholders. That obviously means maximizing its profits. And since GM is in the retail automobile business, that in turn hinges on pro- ducing the sorts of vehicles that people want to buy. Which is how those big SUVs came to exist in the first place.

The latest increase in the price of gasoline happened well after the current generation of large GM SUVs was designed and comitted to production. They can't just up and stop making the things, for the reasons mentioned above. And there's still enough of a demand for them that it would be worth GM's while to keep them in produc- tion in order to amortize their development costs.

Save jobs: buy a GM SUV today!

Geoff

Reply to
Geoff Miller

Indeed beauty is in the eye of the beholder, apparently however more buyers like the looks of the ones sold by GM and Ford than those sold by Toyota ;)

mike hunt

Reply to
Mike Hunter

Noticed that Toyotas growth in US sales over the past ten years has been mostly in the sales of trucks and SUVs not cars. That is where the growth in the industry has been for all of the manufactures, as well. EVERY manufacture prefers to build what buyers are choosing to buy.

mike hunt

Reply to
Mike Hunter

That's about to change pretty soon. Large SUVs and large trucks are going to slow down in sales, especially to the average person. Companies like Toyota are well positioned to take advantage of that where the domestics are in the catch up mode.

Reply to
badgolferman

That may be your opinion but in the real world it is Toyotas trucks and SUVs that need to do the 'catching up.' GM, Ford and Chrysler all have trucks and SUVs that more than compare in quality, size, power and fuel economy to what Toyota offers, that are less expensive and are currently outselling Toyotas offerings. There in no reason to believe they will not continue to do so.

mike hunt

Reply to
Mike Hunter

I thought it "evinced" the stench of desperation.

"Hinges" on GM? No. However, their pandering to our taste for large vehicles isn't exactly helping the situation.

And it puts them in line for trouble when gas prices suddenly increase. It's not like this doesn't happen from time to time and the result is always the same, reduced market share for GM.

Except that strategy doesn't look quite so hot right now, does it?

The latest increase in the price of gasoline was a foreseeable event that GM didn't bother to foresee. I see ads in the paper, still pushing the remaining stocks of 2005s and there's healthy rebates on those beasts. Yep, that's a winning strategy...

Voluntarily enslave myself to the expense of a gas-hog? Thank you, no.

I see Erma Bombeck finally joined the NRA.

Reply to
dh
[GM caps gas prices at $1.99 to encourage purchases of lareg SUVs]

: How about: a way to unload their stocks of suddenly-slow-selling : large SUVs, and to keep the production lines moving enough to : maybe prevent the layoffs of thousands of workers who have to : feed their families? In that respect, it sounds like the path : to, if not profitability, then at least to the minimization of : loss.

: So yes, I think it's a _great_ idea. It evinces a certain : agility of thinking that's uncharacteristic of corporations : of GM's size.

Why the sneer quotes? That's an actual word, you know.

evince, n.: 1 : to constitute outward evidence of 2 : to display clearly : REVEAL

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Anyway, the way I see it is that GM did what it felt necessary to stay in the large SUV market for as long as there was a demand for those vehicles -- and that once the demand began to soften, it reacted appropriately. You seem inclined to be less charitable to GM, for whatever reason.

: I rather doubt that energy security for the U.S. hinges on : anything General Motors does or doesn't do, don't you? :->

: I mean, really now.

What you call pandering, I call providing what the market demands. Which is the whole point of GM's being in business. GM is in the motor vehicle business, not the social engineering business.

What about other manufacturers of large SUVs? Why do they escape your derision?

Different sorts of vehicles go in and out of fashion every few years. Coupes were hot for awhile, for instance, and now sedans are in. Convertibles went away when air conditioning started to become ubquitous. Station wagons became largely passe with the advent of the minivan and later, the SUV. I don't see that the situation is fundamentally different, or a manufacturer partic- ularly blameworthy, just because the vehicles that are on their way out are less fuel-efficient than most.

: GM's responsibility is first and foremost to its stockholders. : That obviously means maximizing its profits. And since GM is : in the retail automobile business, that in turn hinges on pro- : ducing the sorts of vehicles that people want to buy. Which is : how those big SUVs came to exist in the first place.

It most certainly does. GM may take a hit in the short term, but in the long run it came out ahead by building large SUVs. Just consider all those that it's sold over the years.

Look, manufacturers of cars or boats or sewing machines or blow-up sex dolls or anything else are always going to produce what the marketplace demands. That's just the way capitalism works. And absent some government _diktat_, which is unlikely in our culture, that isn't going to change anytime soon.

Geoff

Reply to
Geoff Miller

Pandering. In fact, they (and Ford, and Chrysler) spent gobs of money on advertising to persuade the weaker intellects among us that one needed a big vehicle (with portholes or fins or what-have-you) to somehow be better than the Jones's. They were doing their own social engineering. They got out of the transportation business and into the image business.

You might read Vance Packards' book, "The Hidden Persuaders," for some illumination.

They worked very hard to create a demand for big vehicles but economic realities have interfered with their marketing plans.

Reply to
dh

: What you call pandering, I call providing what the market demands. : Which is the whole point of GM's being in business. GM is in the : motor vehicle business, not the social engineering business.

Providing what the market demands. See, I can repeat myself, too.

What a steaming pile of intellectual gruntfudge. What you described is the essence of advertising for any class of product. It isn't somehow different, let alone immoral, just because it's for SUVs.

Not that most people who bought the things needed any coaxing. The purpose of the advertising was to convince people that one brand or model of SUV was better than the competition's. Your idea that people would never have bought the things if they hadn't been led astray by E-vill Detroit carmakers is preposterous.

I've read it, thanks.

The demand was already there. People were tired of being preached at about driving small, fuel-efficient vehicles that didn't really fit their needs (or desires). Nobody made full-size station wagons any- more, and minivans aren't very stylish.

The resurgence of large vehicles in the form of SUVs has parallels: the recent popularity of cigars and martinis. People were tired of being preached at about health-related things just as they were about driving "socially responsible" cars, and there was a backlash.

Speaking of social responsibility, learn to use a text editor, will you? Your posts include far too much quoted text. The idea is to edit out anything beyond what's necessary to establish context for your responses.

Geoff

Reply to
Geoff Miller

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