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Source:
The Detroit News
Source:
The Detroit News
Big 3: Employee deals for all
Eager to taste sales success of their own, Ford and Chrysler match GM's big discounts.
By Eric Mayne and Brett Clanton / The Detroit News
About the deals
GM: Employee pricing varies by model, but is about 3 to 4 percent below dealer invoice. It's available on new cars and trucks through Aug. 1. Deal excludes Chevrolet Corvette, Pontiac GTO and medium-duty trucks.
Ford: Noncompany employees pay about 5 percent below invoice, plus available cash rebates. Lincoln Mark LT and Ford Mustang, GT and Escape Hybrid are excluded.
Chrysler: Consumers pay 4 to 5 percent below invoice, in addition to any available cash rebates. Deal excludes Chrysler 300, Dodge Magnum, Dodge Charger, Dodge Viper, and SRT performance line.
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The auto industry's latest pricing battle mushroomed Tuesday when General Motors Corp. extended an employee discount offer to all consumers by a month and rivals Ford Motor Co. and Chrysler moved to match the deals on most models beginning today.
Under its Ford Family Plan, Ford will offer nonemployee customers pricing that equals about 5 percent below dealer invoice on nearly all 2005 models.
"Consumers made it pretty clear in the month of June that they wanted a clear plan for purchasing their cars," said David Reuter, a spokesman for Ford.
Beginning today, DaimlerChrysler AG's Chrysler Group will offer a similar plan it calls "Employee Pricing Plus," according to Chrysler spokesman Jason Vine.
Under the program, nearly all 2005 Chrysler, Jeep and Dodge models will be offered at roughly 5 percent below what dealers pay, said Kevin McCormick, another Chrysler spokesman.
Chrysler said last week that it would match GM's offer if it was extended, but did not provide details about its program.
While the deals are boosting short-term demand for new cars and trucks, and helping to lower inventories, analysts warn they will hurt profits and reduce sales in coming months by pulling demand forward.
The average industry discount jumped 10 percent last month to a record $3,269, according to Autodata Corp.
The latest discount programs at Chrysler and Ford, which is the only major automaker to post lower sales this year, came the same day that GM extended its wildly successful employee-pricing program for a month. The moves signal that the nation's No. 2 and No. 3 automakers are anxious not to lose ground to their crosstown rival.
GM's discount plan -- representing 3 percent to 4 percent below dealer invoice -- boosted its June sales by 47 percent and helped lift the overall new car and truck market 16 percent last month. The company's extended promotion excludes the Chevrolet Corvette, Pontiac GTO and GM's commercial pickups.
GM's employee-pricing program drove U.S. vehicle sales to an annualized selling rate of 17.53 million units, up sharply from a 15.41 million selling rate in June 2004, according to Autodata Corp. If sales continue at that pace for the remainder of the year, the U.S. auto industry would have its best year on record.
Mark Cornelius, president of Morgan & Co. Inc., an industry consulting firm in West Olive, Mich., said the bang in June from GM's program is likely to be lessened now that copycat deals are available.
"The pop is gone for GM," he said.
"I don't know that it will be as successful going forward."
Ford and Chrysler ended June with excess supplies of unsold cars and trucks, prompting them to match the GM offer.
Ford and Chrysler also are excluding some hot models, including the Lincoln LT pickup, and Ford Mustang, GT and Escape Hybrid models, as well as Ford's European brands.
At Chrysler, the employee discount does not apply to the Chrysler 300, Dodge Magnum, Dodge Charger, Dodge Sprinter van, Dodge Viper sports car, Jeep Liberty diesel and high-performance SRT models, McCormick said.
In addition, analysts expect Ford to cut third-quarter production and warn its profits will come under more pressure.
"GM's strategy is clearly not good news for Ford, which has been trying to maintain prices on new models such as the Five Hundred and Freestyle," Merrill Lynch analyst John Casesa said in a note to investors.
Ford's discount will be offered in addition to cash rebates available on many vehicles.
For instance, the two-wheel-drive Ford Escape XLT model now sells for $26,335. Under the new employee-pricing plan, that price falls to $23,335, and it drops again to $21,335 after a $2,000 cash rebate is added, Reuter said.
For July, Ford also lowered cash rebates on most models. The highest rebate now is $4,000 on the Explorer SUV and Freestar minivan, down from $5,000 in June.
Ford began notifying dealers about the promotion Tuesday and will kick off a major national TV, print and Internet marketing campaign today.
"We are going to advertise this program widely in a big, big way," Reuter said, describing the central logo of the campaign as a doormat reading "Ford Family Plan" with the Ford, Lincoln and Mercury brands displayed.
Ford dealers will receive window stickers that show the new Ford Family price compared with the original price.
Ford is downplaying concerns that matching GM's program will generate a pricing war.
"We have to do what's right for the customer, and the customer spoke pretty loudly in the month of June that they like a simple, clear and consistent message when it comes to pricing," Reuter said.
You can reach Eric Mayne at (313) 222-2443 or [email protected].