GM ANNOUNCES RED TAG SALE!

DETROIT -- General Motors is starting a national incentive program to run through Jan. 3 despite claims that it would hold to its value pricing strategy.

The program, called GM Red Tag Event, starts Monday, Nov. 14, auto dealers say.
A GM spokeswoman declined to comment on Friday, Nov. 11.

Under the program customers can get any 2005 or 2006 Buick, Pontiac, GMC or Chevrolet car or light truck at the supplier price plus $100, several dealers say. The exceptions to the sale are the Pontiac Solstice, Chevrolet Corvette and new Buick Lucerne, they say. The supplier price is the price offered to employees of GM suppliers.

For example, a 2006 Buick LaCrosse has a sticker price of $23,595, says a Buick dealer who asked not to be named. The supplier price is $21,996, he says. Customers also can use any applicable incentives. GM offers a $1,500 rebate on the LaCrosse. Therefore, the vehicle would cost $20,596, the dealer said.GM's last big national incentive program, Employee Discount for Everyone, ended Sept. 30.

Mark LaNeve, GM's vice president of vehicle sales, service and marketing, had insisted that GM would stick to a value pricing strategy for 90 days and offer no big national incentive programs. But the automaker reported a 23 percent sales drop in October from the year-ago month, and dealers have been pleading for more incentives.

Dealers asked GM executives about value pricing during a closed-circuit broadcast on Friday, Nov. 11. Executives told them that there are two big selling seasons -- summer and year end. Dealers say GM executives told them GM would be "crazy not to have a promotion" during the year end because "all the competition will."

GM's value pricing strategy consists of lowering sticker prices on the base models of certain vehicles. The program is designed to move the stickers closer to the transaction prices.

GM told dealers that it will start a national advertising campaign on Sunday, Nov.13, using the slogan, "See some red. Save some green."

GM will send red tags to dealers to hang in the vehicles' windows with the revived advertising phrase, "The price you see is the price you pay, not a penny more."

"It's not nearly as good as GM's employee pricing sale," says Ken Fichtner, owner of Fichtner Chevrolet in Laurel, Mont. "It's 2 percent higher for the customer than GM employee pricing was."

Fichtner says GM will give dealers $400 gross profit per vehicle under the promotion. He says the $400 will be less than the profit per vehicle he received with employee pricing, which was 5 percent of the sticker minus the destination charge.

But Buick dealer John Rogin says his sales staff broke into applause and cheers when GM said the salespeople's bonuses would be $150 for each vehicle sold in November and $100 for December.

GM ran a Red Tag sale at this time last year. Under it, dealers set a vehicle's price by combining previously announced incentives with a cash bonus between $500 and $2,000 when buyers financed through General Motors Acceptance Corp.

Many dealers were lukewarm about that program, and GM's December sales in 2004 fell 3.2 percent despite the program.

GM will end any other existing incentives on many of the 2005 vehicles with the new Red Tag Event.