Though General Motors Corp.’s overall incentive strategy will remain intact despite the automaker’s latest liquidity-building initiative, industry players are split on whether rebates and special financing deals will increase.
“There will be no change in GM’s strategy for incentives,” company spokesman Randy Arickx told Auto Finance News. “Market dynamics [will continue to] influence things more than anything else. Capacity has something to do with it, as well.”
In mid-July, GM unveiled a restructuring plan meant to boost liquidity by $15 billion by yearend 2009. On the agenda are buyouts and early retirement incentives to white-collar employees and further reductions in truck capacity, among other things.
Those efforts to reduce inventory will likely spur GM to increase incentives, albeit more prudently, said Jesse Toprak, executive director of industry analysis for Edmunds.com, a Santa Monica, Calif.-based provider of automotive data.
“GM has already increased incentives in the last three months,” Toprak said. Specifically, GM’s average incentive spending climbed to $3,454 in June from $3,309 in May and $3,132 in April, according to Edmunds.com data. Even so, the automaker is “getting a little better at optimizing how they spend incentive dollars, figuring out what to spend and how to spend,” he said. “They’re able to optimize what they spend on new SUVs and trucks.”
Meanwhile, dealer Dave Sandow expects GM to limit spending on rebates and special financing deals. “The way they’re talking about cutting back on everything, you can only assume they’ll cut back on incentives,” said Sandow, sales manager at Jim Riehl’s Friendly Hummer, in Clinton, Mich.
Whatever GM decides with regard to incentives and subvention, GMAC LLC “stand[s] at the ready to execute,” said Mike Stoller, a GMAC spokesman. Despite being majority-owned by private equity firm Cerberus Capital Management LP, GMAC remains GM’s mechanism for incentives.
And, as it has historically, GM’s “incentive strategy changes from week to week, day to day,” he said. “It’s a fluid process on their end. They might decide at the end of September what the incentives will be for October.”
—Marcie Belles
