If Retailers Can Do It, Why Not the Automakers?

Posted by truecreek on April 7, 2009 under Opinions. Everyone has them. | 3 Comments to Read

By Joseph Young

I just don’t get it. Today, I read ANOTHER full page ad in The Washington Post from GM, touting their new TOTAL CONFIDENCE PLAN, complete with a deal for OnStar, an upgraded powertrain warranty, vehicle value protection (whatever that means) and the newest and most popular trick in the book, a payment protection plan should the buyer lose their job.

gm-logoNice stuff, but for me, I just like it simple.  So, I have an idea.  Lower your prices.  Have a sale.  25% off all Pontiacs.  30% off all GMC trucks.  Buy one, get one free.  But you have to close the deal by the end of the month.

It’s that simple.

Sure, there are the folks that bought cars in the past few months that wouldn’t be very happy.  Well, extend their warranty, or something like that.  It’s so easy to think about why it wouldn’t work, but we all know it would.  Long term, it might be an issue, but right now the writing is on the wall for these guys and they have to make a bold move.

It’s time for the Automaker Inventory Reduction Sale.  Now through the end of the month.

Think about it.  Today, there are a gazillion cars just sitting on docks all over the place.  Things are so bad they are even storing them in airport parking lots, for Christ’s sake.  Why not take all of that inventory and put the stuff ON SALE? Talk about getting cash flow moving again.

Dealers would be happy, because this would be a manufacturer driven sale.  Customers would be happy because you would be speaking in a language they fully understand and can appreciate.  And I would hesitate to think that the poor car salespeople just wouldn’t know what to do with themselves.  It hasn’t exactly been nirvana for them lately.

Everyone loves a deal, but a deal that is clean and simple is to die for.  All of these ‘creative’ new bullet points, complete with all of their disclaimer copy just confuse the issue at hand.

Can you imagine walking into a dealership today knowing that you were about to get a car for 30% under MSRP?  Shoot, let’s go for 40%.  They would just fly out the door.

If the retail establishment can do it, why not the automakers?  From a competitive standpoint, it would just smoke the foreign competition.   It would take virtually every sale off the table.   It would be a Made in the USA home run for GM and Chrysler.  But they better hurry.  Time’s a wastin’.

  • Brian said,

    Because the cost of designing and manufacturing that T shirt you are comparing costs about two dollars to produce and a .50 cents to ship. Add a couple of dollars to the middle men and it’s easy to discount that $40.00 t shirt 30% off.

    I’m guessing you charge a pretty penny for your advertising services and all that is mostly is an idea, maybe some print costs maybe some air time purchased, yet I’m guessing that you couldn’t just lower your prices by 30 to 50%

    In the end your just spouting your ignorance.

  • truecreek said,

    Brian, while I certainly appreciate your reply as well as the fact that you are reading my blog, you are misinformed.

    First, just today, Volvo announced a PRICE REDUCTION on their 2009 XC90 of 10%. Full pager in the USA Today. The ad positions the reduction as a ‘Savings’ from the ‘Was’ price to a ‘Now’ price, but from a business perspective, it’s the same thing. They are offering a financial DISCOUNT on the car. No added value, no satellite radio for free, no extended warranty….just a reduction of the price. It’s supply and demand. Too many cars, lower the prices. Simple. Hopefully, the other manufacturers will see the light of this direction. Believe me, there is plenty of margin to tinker with in the MSRP price of any car today. Plenty.

    Second, one of the reasons True Creek is doing so well today is that we offer outstanding creative, production and media services to a select group of clients at a very competitive price point. My clients include Comcast, Suddenlink, Primus Telecommunications and more. The company started with an understanding that we would offer a great product at a fair price and the business model is working wonderfully.

    Third. I don’t know where you are buying your t-shirts, but if you are paying $40 for them, you are getting hosed.

  • Justin said,

    The reason for offering, for example, “No-Charge Service For 3 Years” is simple.

    Your cost to do an oil change, $40. Dealer’s cost to do an oil change, $20. Gm is providing $40 value at the cost of $20. As a side benefit, it puts cash in their dealer network’s pocket (because naturally, GM is paying the dealer for the work provided).

    And just as Brian said, If you think it cost Ford $5,000 to make a Ford Fusion, well wouldn’t that be amazing! There just isn’t the room to offer 25% discounts and you said it yourself, it’s a bad move long term. Everyone is constantly slamming GM, Ford, & Chrysler for thinking short term with trucks & SUVs while you are asking them to think short term with pricing!

    (Full disclosure, I own a small used car store in Ottawa, Ontario so I have no direct link to any manufacturer)

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