Will GM’s New Buyer Incentives Help Sales?

CBS Evening News: Troubled Carmaker Tries New Tactics To Lure Customers Into The Showroom

(CBS)  As General Motors tries to pull an emergency U-turn, the new man in the driver’s seat, CEO Fritz Henderson, admitted Tuesday that the company is facing a crisis with consumers.

"It's about confidence. It's about credit. And it’s about employment," Henderson said.

So GM unveiled a new package of buyer incentives, reports CBS News correspondent Anthony Mason. The automaker, like Ford and Hyundai, will now offer to make car payments for buyers who are laid off from their jobs. GM also promises to guarantee the trade-in value of its vehicles, when buyers purchase another GM car or truck.

"Certainly our view is we need to bring customers back into the equation," Henderson said.

Because across the industry, sales have been in freefall. In 2005, nearly 17 million vehicles were sold in the United States. This year the industry’s on course to sell just 9 million. Can it survive at this rate?

"Survive, maybe. Prosper, no," said industry analyst Brian Johnson.

Johnson said the industry’s old sales tricks, like zero percent financing and rebates simply aren’t working anymore.

"They've really lost the ability to kind of wake up the consumer and say it’s time to go in the showroom," Johnson said.

So President Barack Obama is promoting a new federal tax break.

"If you buy a car anytime this year, you may be able to deduct the cost of sales and excise taxes," he said.

Mr. Obama’s backing a proposal that would give cash to buyers who trade in their old, gas-guzzling clunkers for new fuel-efficient cars. A similar program in Germany has boosted sales there by more than 20 percent.

“This would really help us out because we’re really hurting,” said a car dealer in Los Angeles.

GM wouldn’t say what it’s new incentives will cost the company. But even the most radical cost-cutting measures can’t save GM if customers don’t start buying cars again.

[mars7578]

gm is just like a lot companies in the new world economy.the new model for companies including banks is to keep as litlle reserve as possible and turn every asset to value so that it can be wagered on wallstreet. not realiziing the consequences of all this betting until it was too late,gm has been losing and living off loans and hype for years.gm needs some non attached group to come in and lay out a good plan for the company as a whole.i dont see how the company groups such as stockholders or union can do this. the best they can do without bankruptcy is agree to be bound to the plan developed by a professional company.

[roach9703]

GM needs a product line pruning. Keep the brands like Buick, but kill the losers.
Another possibility is to put each product line up for bid; generate the cash and rebuild a much smaller company. Smaller auto companies selling a few products lines is possible with the new technology we have today.
The sales presentation yesterday did not seem very convincing.

[nolies74621]

Well, if you have never owned a Ford than you are not an authority on their products. That saying is nothing more than a playful joke between Chevy and Ford enthusiasts. Perhaps you should try supporting the "home team" and buy American, assuming you don't
Posted by djberson at 8:30 AM : Apr 1, 2009


I have never owned a Ford but I have driven them both as rentals and as a work vrhicle. Fords are cheap, the interiorsare cheap, the engines wear out quickly. I Love my VW Passat tTurbo with 280 horse power which I have it here in Germany with me. I got it up to 155 MPH on the autobahn. If I can't have a VW give me a MOPAR any day over a FORD. Msutangs GT are the only decent Ford products but they can't hang on the autobahn, they were'nt built for it. I smoked quite a few of them in my Turbo powered Passat T.

[sjc_1]

I have always bought American cars and I have no regrets. I figure what goes around comes around. If I want to see American workers have a decent standard of living, I will support them in value added manufacturing. You earn more turning iron into cars than turning hamburgers at a fast food place.

[citizen123]

I've never bought any vehicle, except Chrysler and GM. Thanks to Obama's buffoonery I'll never buy another one regardless of price.

[citizen123]

I've never bought any vehicle, except Chrysler and GM. Thanks to Obama's buffoonery I'll never buy another one.

[djberson]

JD Power and Associates rates BUICK the number one brand for long-term reliability, ahead of ALL others. ALL of them. Lexus and Toyota is high on the list too, but not as high as Buick. Honda has lower reliability ratings that THREE US BRANDS, Buick, Mercury and Cadillac. I am not making this up, Google it!

[djberson]

" I drive a BMW 535i I bought new in 1992. Still runs and looks great. Why would I buy anything else?"

Because what does that prove? I drive a ten year old American car that I bought used and still runs and looks great. It has as much power and more luxury features than most brand new BMW's do. It is an extremely reliable vehicle and fun to drive. I also drive a 40 year old American car that I also bought used that looks and runs great.
You could try being patriotic, and support the industry of your country, and keep the prosperity here.

[djberson]

"Ford stands for Fix or Reapair Daily .....or Found On Roadside Dead. I have never owned a Ford."

Well, if you have never owned a Ford than you are not an authority on their products. That saying is nothing more than a playful joke between Chevy and Ford enthusiasts. Perhaps you should try supporting the "home team" and buy American, assuming you don't

[1Jolat]

If you plan on taking advantage of this program, make sure that before you go car shopping you visit www.kardawg.com. They're not selling anything, It's free information.

[ShermanMiller]

It is great to see that car companies finally realize that people are very very nervous about losing their job, so purchasing an automobile may appear to be foolhardy. I hope the car companies? willingness to make car payments for a period of time or take the car back will offer some peace of mind in purchasing their vehicles. However, with the continued disappearance of good paying jobs in the current economic meltdown, the issue may be the willingness of US car manufactures to develop low cost vehicles that the new cost conscious American public is willing to buy. My guess is that American car manufacturers also need to take some lessons from Tata Motors in India who has made car sticker-shock a relic of the pre-global economic meltdown.

[retiredgustav]

I had a 16 year old Saturn with 250,000+ miles on it. I still would have had it except for hurricane Ike (Not enought drivers to move all of my vehicles). Point is any car will last if you take care of it.

[morris27282]

The more they sell, the more they lose. Their bottom line looks better the LESS they sell. This is all so pathetic. We are subsidising their losses. We should PRAY that they sell fewer cars so our children don't have to pay for their losses.

[mjvwsr]

I drive a BMW 535i I bought new in 1992. Still runs and looks great. Why would I buy anything else?

[nolies74621]

Ford stands for Fix or Reapair Daily .....or Found On Roadside Dead. I have never owned a Ford.

[nolies74621]

I have'nt bought an GM made car since I bought a Pontiac Grand Am in 1992. It was'nt quality. The 2nd week I had it the transmission linkage snapped and I had to have it towed to get fixed, then they tried to say I abused the car. Well after I got it out of the shop it broke again 1 month later. The car dealership was always difficult with warranty service. I own a 2007 VW Passat right now and it is a terrific car.

[cheetah-man7]

I love my Toyota - never again would I even consider purchasing an American piece of crap again. No matter how much incentive money they wave in front of me. After owning a Ford and a Pontiac, I learned my lesson!

[nolies74621]

The best solution to a down economy are stable good paying jobs. We have been Walmartized down so far the people can not afford anything unless they borrow for it. Germans are more used to saving to buy something. Our savings rates has been so low that years before this collapse, it was actually negative. That means that people were living on borrowed money. Not a rosy future with that pattern.
Posted by sjc_1 at 8:00 PM : Mar 31, 2009


I agree with you. I am a retried soldier and DOD Civilian employee and have lived in Germany for about 16 years. I saved a good bit before I met and married my German wife. She got me to save even more and to buy only if I could pay cah and it has paid off. We can buy pretty much what we want right now. We have one credit card and use it once in a while for gas or to purchase some clothing and pay it in full a when the bill is due so as to keep our credit score up. We bought our house and were able to put down 35% of the cost of the house. Germans frown on credit, especially credit cards. Houses here are usualy passed own from generation to generation. My sister in law and her husband live with her parents and will inherit the large dairy farm that they own when they pass. They will have to buy out my wifes share of the property when that day comes. My other sister in law and her husband live in the same house as her husbands mother and they will inherit the house when she dies. Many German homes are two or three family units and they often rent out the 2nd or third family unit. The Germans have it right when it comes to this. Family is most important!

[sjc_1]

The best solution to a down economy are stable good paying jobs. We have been Walmartized down so far the people can not afford anything unless they borrow for it. Germans are more used to saving to buy something. Our savings rates has been so low that years before this collapse, it was actually negative. That means that people were living on borrowed money. Not a rosy future with that pattern.

[bumpedoff1]

Don't buy america more jobs lost it help get rid of obama