GM cuts prices on 30 of its 2006 models

Southfield, Michigan, Aug. 1 | Updated: Aug 2 2005, 05:32am hrs
General Motors Corp., the worlds largest automaker, will cut prices on 30 of its 2006 models, according to people familiar with the plan, as the company stops giving employee discounts to all buyers.

The price cuts, scheduled to be announced this morning, will amount to as much as $4,800 on the Cadillac DTS, people familiar with the details said. The Pontiac G6 gets a $645 reduction, and some models will get less than that, the people said. The automaker will offer a total of 50 models with some combination of reduced prices or added features, extended warranties or other changes at no extra cost, the people said.

Reducing the haggling that everyone hates should help buyers feel like they are getting the best deal possible while eliminating some of the sales friction from the buying process, said Pete Hastings, vice president of corporate fixed income at Morgan Keegan Inc., a Memphis, Tennessee, investment bank.

Todays announcement is part of GM Chief Executive Rick Wagoners plan to make the prices of GM vehicles more attractive, particularly in Internet comparisons, and rely less on rebates. GM lost more than $2.2 billion making cars and trucks in the first half of this year as it cut North American production to reduce inventories of unsold models.

GM, which sells 76 models in North America, is trying to retain market-share gains after ending the two-month employee- discount offer today. The promotion sparked a 47 percent gain in GM sales in June, the first time since January 2003 that Toyota Motor Corp., No. 2 in the world behind GM, didnt gain U.S. share. The 13 analysts surveyed by Bloomberg last week estimated an average July sales gain of 13 percent for GM, adjusted for the fact there is one less selling day in July this year.

GM spokeswoman Deborah Silverman declined to comment on the price cuts.Ford Motor Co., which followed GM by offering employee discounts to all of its buyers in July, will announce its incentive plans for August today, spokesman John Harmon said. DaimlerChrysler AGs Chrysler, which also echoed GMs strategy in July, is scheduled to announce its next incentive plan tomorrow, spokesman Kevin McCormick said.

Toyota said July 29 it would raise prices on 10 of its 2006 models an average of 1.2 percent. The automaker has now raised 2006 U.S. prices on all 2006 Toyota, Lexus and Scion brand models.

GMs price cuts include popular models such as the Chevrolet Silverado pickup, with a $3,000 reduction, and the GMC Yukon sport- utility vehicle, which gets a $1,300 lower sticker price, the people familiar with the plan said. They asked not to be identified because the details are not yet public.Buick General Manager Steve Shannon said July 5 that GM will cut as much as $500 from the price of some Buick models, add more powerful brakes and other features valued at $1,300 for no additional cost and extend the warranty from three years or 36,000 miles to four-years, 50,000 miles. GM also said it will extend Hummer SUV warranties to the same length.

Bloomberg