Tuesday, January 10, 2006

GM is Cutting Prices

A few days ago, I posted rumors that GM was going to lower its car prices. Those are no longer rumors as GM is cutting prices on of 57 of its 76 American models. This includes most lines but excludes Saturn, Hummer and Saab. The average price cut is $1300, which is a significant part of the price. Some prices are being cut as much as $2500.

This is good, but it still does not cover inflated management and labor costs which are way out of line. Management needs to have a significant cut in pay and hourlys too should see some adjustments. I hate to say that because it could effect me but if the company does not survive and prosper my paycheck won't either.

GM did recently wow the Detroit auto show with a new Camaro which got some positive attention but it is apparently not slated to go into production right away.

Plus there is a rising star in GM's executive offices, the Chief Financial Officer, Frederick Henderson, who is described as no-nonsense "let's get the problems fixed" sort of guy. If that is indeed what he is then he may well be part of the solution. The Detroit News described him but was quite sketchy on specific plans he might have. Is he going to be a real help or is he another empty suit? Time and results will tell. I do like this though: he openly admits that GM has a credibility problem. That is definitely a start.

There must be some good news or something that investors really like because GM stock has been rising for the last few days.

3 Comments:

Blogger The Conservative UAW Guy said...

I hear a lot of people where I work blaming Bush, but the fact is that car sales in N America are NOT down.
If GM made cars people wanted, there would be no problems with health care and stock prices.

It's not that GM doesn't make good cars (now), but that they have a bad reputation to overcome, and they're lineup doesn't inspire oohs and ahhs like Chrysler's or some of the foreign nanmeplates.

Here's hoping we all come out of this ok. I'm too old to start a career over...

11:27 AM  
Blogger NEO, SOC said...

The sad reality is that many of the vehicles are being created to not last so long because the companies want to make the dough through the service contracts. However, many of the foreign auto companies are starting to realize the cash potential in car service and are aiming the same to include 'service' contracts with their vehicles. Pretty sad.

5:45 PM  
Blogger Crazy Politico said...

I hope the strategy works. I read somewhere else that they are planning on using that instead of the "incentive" programs they normally use.

I think while the lower stickers will help, consumers have become so accustomed to dealer incentives, they may hold off buying, thinking those are coming down the road.

8:02 PM  

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