GM TO LOWER 2006 PRICES!

By Jamie LaReau and Jason Stein---Automotive News / June 13, 2005


DETROIT -- General Motors, which dropped sticker prices in February on 22 mid-sized SUVs, is about to extend that strategy. GM will cut base sticker prices for some Chevrolet, Pontiac and Saturn nameplates, say three dealers who have been briefed on the automaker's strategy for 2006 models. The strategy will allow GM to lure shoppers by advertising lower prices on the Internet, say dealers who were briefed last week.

The move also is aimed at trimming costly rebates. Dealer profit margins on some base models will shrink by 1 percentage point, but margins will rise on vehicle accessories. So dealers will make more money on option-laden vehicles, less on stripped-down models. Mark LaNeve, GM's vice president of vehicle sales, service and marketing, confirmed late Friday, June 10, that GM soon will unveil a new pricing strategy. But he declined to offer specifics.

"We'll be communicating quite a few '06 prices very shortly," he says. "We're going to be making adjustments to get to more compelling price points." GM already has priced the 2006 Pontiac Solstice at $19,995, the Hummer H3 at $29,500 and the Chevrolet HHR at $15,990, including freight. Analysts say those prices should jibe more closely with transaction prices - what buyers actually will pay.

GM multifranchise dealer Gordon Stewart likes the idea. "This pricing could shock the industry, and they probably want to beat every one else to the table," says Stewart, president of Stewart Management Group in Harper Woods, Mich. "It's a major marketing ploy."