It worked so well, GM extends financing incentive
Automotive News | July 2, 2008 - 12:25 pm EST
It worked so well, GM extends financing incentive
DETROIT (AdAge.com) — General Motors said its latest incentives on 2008 models will be extended because the promotion worked so well driving traffic in the final days of June.
GM will extend 0 percent financing for 72 months through the July 4 weekend.
From June 23-30, GM offered 0 percent financing for 72 months on many 2008 models. The sale “sparked momentum by getting customers off the couch and back into the stores,” says Mark LaNeve, GM’s North America vice president of vehicle sales, service and marketing. “It really helped build demand.”
At Thompson Sales Co. in Springfield, Mo., owner Lynn Thompson says he had hoped to sell 50 new cars during the 72-hour sale and sold 46.
“We sold some big SUVs,” said Thompson, who sells Buick, Pontiac, GMC, Cadillac and Saab. “When you think about what you’re saving on finance charges, that buys you an awful lot of gasoline. It basically buys them two and a half years’ worth of gasoline.
“I can’t tell you how dismal the first two weeks of June were. It was just, wow — bad.” For the month, sales came in 16.5 percent below the same period last year, Thompson said.
At the Jones Family of Dealerships in Lancaster, Pa., the incentive helped June sales rise compared with a year earlier, owner Steve Jones said.
“It was a roaring success,” Jones said. “The week before, we had not sold a single GM vehicle. That’s how slow it was. When they announced the sale last week, we sold 18. Our traffic was up by at least 50 percent compared to the beginning of the month.”
Jones sold 44 total new GM vehicles in June; 18 came in that last week during the 72-hour sale. He sold 36 vehicles in June last year.
“I would never have guessed that we’d be up,” said Jones, adding that the main increase was in car sales.
LaNeve said he thinks GM improved its market share by one point in the month to about 22 percent. As a result, GM fended off Toyota Motor Corp., which had threatened to take its market share lead in June.
GM dealers typically tally half their monthly sales in the last 10 days of a month, LaNeve said Tuesday, July 1, in a conference call with analysts and reporters discussing the company’s June U.S. sales. But he estimated the sales event translated into 60 percent of GM’s total of 265,937 vehicles delivered in June.
That is 8 percent fewer vehicles sold than a year ago, when adjusted for three fewer selling days this June, and an 18.5 percent drop unadjusted.
Nipping at GM’s heels
Toyota Motor Sales U.S.A., which has been nipping at GM’s heels in the United States, reported it sold 193,234 new vehicles in June, a decrease of 11.5 percent from June 2007 when adjusted for fewer selling days.
McCann Erickson in suburban Detroit handled the creative for what GM called its 72-Hour Sale, promoted via TV, radio, newspapers and online. A GM spokesman called it “corporate advertising at the divisional level,” with each GM brand using the theme but showing only its models in ads.
The spokesman declined to disclose spending by medium. But a Saturn dealer said newspapers were broadly used, at least in the first days of the sale, because of their fast closes.
A Buick-Pontiac-GMC dealer said many of GM’s regional dealer associations use newspaper, radio and online in the summer because consumers don’t watch as much TV.
In early 2006, LaNeve said that GM no longer would do broad sale ads with vehicles from different brands. He vowed Tuesday that GM would not have “a steady diet” of incentive sale ads because “after a while, they start to lose their effectiveness.”
‘We’re well-positioned’
GM’s Mike DiGiovanni, executive director of global market and industry analysis, said the automaker’s retail sales accounted for 75 percent of the total, with 45 percent in mid-sized cars, mid-sized crossovers or smaller vehicles. Nearly every model GM sells in those categories posted higher retail sales in June compared with a year ago, DiGiovanni said.
“Clearly, our products are where the market is moving to, so we’re well-positioned,” he said.
The entire auto market is “depressed,” he said, because of the economy, high gasoline prices, the credit crunch and the housing market malaise, all of which are putting pressure on every vehicle segment. DiGiovanni revised GM’s 2008 outlook for industry sales to 15 million vehicles, down from its mid-15 million estimate earlier this year.
In June, roughly 40 percent of the vehicles GM sold had four-cylinder engines compared with about 22 percent last June, LaNeve said. If GM had had more four-cylinder models available, he said, the company would have sold 8,000 to 10,000 more vehicles.
LaNeve said Pontiac’s new G8 is a rare exception to that, with buyers preferring an eight-cylinder engine in that car over a V-6.
Getting the word out
LaNeve said one of GM’s big challenges is getting the word out about its broad line of fuel-efficient vehicles. “It’s very tough to get that story told, but we are doing our damnedest to get that story out there.”
One way GM is addressing that, he said, is moving 25 percent of Buick-Pontiac-GMC’s “media assets” to the new “Fuel Economy Guide” ad campaign that lets consumers figure out fill-up costs and the cost per gallon for specific GM models.
In Flint, Mich., Randy Lauria saw floor traffic in three stores increase 30 percent in the last few days of the month because of to the 72-hour sale. Thirty-three vehicles were sold at Patsy Lou Chevrolet, 19 Buicks and 21 GMCs at Patsy Lou Buick-GMC and six vehicles at Patsy Lou Pontiac, said Lauria, who is general manager of the stores.
Those sales make up 30 percent of his total for June, Lauria said.
The Buick-GMC store finished the month with sales down 28 percent, Pontiac broke even, and the Chevrolet store finished up by 10 percent, he said.
Still, Lauria is angry with how GM handled the sale, especially with the last-minute extension to Monday, July 7.
“GM said this would absolutely not be extended,” Lauria said. “We were here ’til 11:30 last night delivering cars and telling customers it was the absolute last day. So our credibility is out the window, and we’re the representative of GM. And for GM to mislead us makes me mad.”
