Since losing nearly $1.3 billion in the first quarter, General Motors has announced a number of reforms meant to right the listing company. Brands such as Buick, Pontiac, Saturn, and Saab will be tightly refocused, and perhaps shrunk. A new "value pricing" scheme meant to reduce rebates and other incentives will lower prices on many 2006 models, so that sticker prices are closer to what buyers actually end up paying. And the "employee discount" promotion run by the world's biggest automaker this summer– widely copied by others–led to record car sales in July. GM's marketing chief Mark LaNeve discussed some of these moves with our auto guru, Richard J. Newman.
Did you intend for the employee discount promotion to last all summer when you rolled it out in June?
We were only going to run it one month. We were overwhelmed it worked so well. Then we knew Ford and Chrysler were going to do it. By then, we couldn't talk ourselves back into two months of discounts and other incentives. So we continued.
It's been extended several times. Will it truly end as scheduled on September 6?
Not sure. We may continue it as an '05 run-out. We may run it on '05s till they're gone.
Will "value pricing" last?
I don't know. We'll try like hell. There will still be incentives, but they'll be a lot smaller.
When all is said and done, are people actually getting cars cheaper, whether it's incentives, employee discounts, or value pricing?
No. Average transaction prices are about the same.
You mean all those people who bought cars in June and July thinking they were getting a great deal ended up paying about what they would have paid anyway?
Right. But prices are a lot more consistent now. What consumers worry about is whether Joe down the street got his Suburban for $2,000 less than I did. Now everybody's paying the same price.
Some of your foreign competitors say that Ford and GM seem to spend all their efforts going after each other, while leaving the Japanese free to corner the market.
Ford has followed GM, not the other way around. Chrysler has followed GM. When we do internal benchmarking, we mention Toyota a helluva lot more than Ford.
Does it matter if Toyota surpasses GM as the world's No. 1 car company?
In my mind they already have. They own the high ground imagewise. Japan Inc. has already gone by us. That's an old story. Now we're the underdog. Toyota has become a default brand. If you don't know what to buy, you buy a Toyota.
Why has that happened?
It takes a long time to change perceptions of quality. We're not going to shift people's minds overnight. We've also been totally positioned as a gas-guzzling company, even though we have more fuel-efficient cars in more categories than Toyota. I'm convinced that's hurt our business. It will take good products to change our image.
