GM's Employee Discount For Everyone
August 1, 2005
By Scott Lewis
You have all heard about GM's latest sales pitch. Employee Discount for Everyone. You pay what we pay. This should impact my own buying decision, don't you think? I thought I would take a quick look at how this impact's my own new car buying plans, and just relay how much impact this program had on the market.
Timing is Everything
Like the saying goes, timing is everything. And I don't have it. I will not be ready to buy a car until late 2007. However, if this was mid 2007 and they offered this program, would it be enough to get me to accelerate my plans and take advantage of such a great offer? We'll see.
Is It That Good
I have a little bit of "second" hand experience with this employee purchase program. My brother-in-law works for EDS. When Ross Perot left GM he made it part of his leaving that GM would provide its employee discount to EDS employees. My brother-in-law bought two Saabs under this program. It is available for extended family members. Extended enough that he help his parents buy a Buick Rendezvous, and almost helped his wife's brother buy a Corvette.
I should be able to leverage this for myself. My wife is his sister, and she would be eligible to use the discount with his help. But time is running out. I believe (but don't know) that EDS is on a time limit to use this program, and I don't think it will be available for me to get my brother-in-law's help in 2007. I will have to research this further, but that's not the point here.
Which Sales Do They Want
The point of this article is if I would buy a GM car during this deal over something else. The problem with a great deal like this is that is mostly gets people to buy something a little sooner. It accelerates their purchase a few months. Which means that when the offer is over sales dry up.
Does this program work to get people to consider a GM product over some other brand? That is the big question. We'll get to that in a moment.
How Good Was It
In case you haven't heard how good this program is, let me spell it out for you. GMs' sales grew 46.9% during the month of June 2005, from June 2004's sales. This is huge. This is their biggest sales for the month of June in 19 years. Their market share jumped 6.9% for the entire market pushing them to selling 32.8% of all cars and trucks in June 2005. That is the first time I have ever heard that GM went over 30% since they lost their marketshare a long time ago. The event was so good that GM decided to extend the deadline from July 5th to August 1st. I have to assume this is massively hurting GM's profits. Clearly they see this as a way to gain back marketshare they have been losing for a long time.
However, this is a bit misleading for some people. It turns out that truck buyers got the most of this deal. Truck sales were up 75.8%, while car sales were only up 8.5%. The reason this is a problem is because I am not going to get a truck (or SUV). I am going to get a car.
Cars for Sale
Let's see what CARS GM has to offer to try and get me away from another brand. To do this I went back at my past articles to see what cars from GM I mentioned, and cars from the competition.
Here are all the cars on my "new cars" list from April 2005:
Chrysler 300C/Dodge Charger R/T
Pontiac G6 Convertible
Honda Accord Coupe
Wow, I was a little surprised that four cars listed were from GM. But let's take a closer look. For starters, I won't know until fall 2006 whether I can get away with buying a two seater, plus the Solstice is not available yet. The SSR falls into the same category, can I really get a two seater... and do I really want one. Plus, if you read my comments on the SSR from April you will see that I was hoping that GM would make a non-retractable hard top without the permanent lid on the truck bed. That is not happening.
We are down to the Pontiac GTO and the G6 Convertible. The G6 convertible, which is to use a retractable hardtop, is not yet for sale. Unless GM extends this plan until late fall (a bad time to introduce a convertible) the Employee Discount Program won't do much here. Oops again.
When I read about the extension to August 1st for the Employee Discount program it said three vehicles are NOT eligible: the Corvette, the GTO and the Hummer H1. Oops, that leaves the GTO out. Which is puzzling. One of the reasons for such a program is to increase sales. The GTO is not selling as it was expected, so why exclude it from this program?
I did look at the GTO on Pontiac's web site in early July, and they seemed to offer the program for the GTO. The discount brought the GTO from a MSRP of $34,295 down to $30,979, for a discount of $3,316. That doesn't seem like a great "employee" discount. The Pontiac G6 goes from $23,925 down to $20,820 for a discount of $3,105. Percentage wise that's 9.7% for the GTO and 12.9% for the G6. Oops, the cheaper car gets the bigger discount... by percentage.
When I looked at Pontiac's web site near the end of July the GTO was clearly stated as not being part of the program.
If we look back to my June article on used cars I mentioned the Cadillac CTS-V as a possible car I would consider. Unfortunately, even with the employee discount the CTS-V is priced at $46,363, which is still way out of my price range.
So that leaves nothing. Now, before we write off this as the end of the chance to use the employee discount program, we need to see what cars I would buy just because of the program. By that I mean, does this massive discount put any cars in my price range that were not before, or does it get me to consider cars that would be competition for other brands.
The Cadillac CTS is about the only car I can think of that I might consider that I have not previously mentioned. I really like the sport/luxury sedans from BMW, Infiniti, Acura and soon to be Lexus. The CTS is the only car that comes close to those. The (base) MSRP for the Luxury Sport version (A nice package I might add) is $41,385. The Employee Discount price was $36,568, for a savings of $4,817. That comes to an 11.6% savings. One step down from the Luxury Sport trim level is a package called 1SB. I don't know everything involved in this package and if I would consider it over the luxury sport trim, but I did want to price it out. After all, it does come with the same 3.6l 255hp engine. The 1SB has an MSRP of $33,135 and an Employee Discount price of $29,803. That's almost exactly a 10% discount with a dollar savings of $3,332.
The GM Employee Discount would definitely have me visiting a Cadillac dealer for a test drive.
There just aren't other cars that GM makes that I find interesting. The GTO is not really any better than the Mustang, and cost more even with the discount. Why bother? None of the other brands have any really good cars. Why they don't use a stripped down version of the CTS chassis to build some other sedans is beyond me. While spreading the wealth with the CTS platform, they could shorten the wheelbase a little and build some decent two door vehicles.
This is not supposed to be a diatribe on how badly GM makes cars, it is about the Employee Discount for Everyone program. And since it boosted sales of trucks so much, let's take a look at that.
Although I am not a truck person, I thought I would take a look at a couple of trucks myself. Even though I am not in the market for a truck I do know what I like about some trucks. Let's see what regular cab, short bed pickups I can find. I can't say for certain that these are the models I would buy (if I were buying). I would need to do a little comparison shopping in person to zero in on the trim level. However, judging from their web site here are the pickups I would consider.
Chevrolet Colorado - Regular Cab, Short Box, 2WD, ZQ8 Sport Model - base MSRP: $19,425. Employee Discount price: $15,151. Savings of $4,274 - 22%. Silverado 1500 - Regular Cab, Standard Box, 2WD, LS - base MSRP: $26,285. Employee Discount price: $19,417. Savings of $6,868 - 26.1%. GMC Canyon - Regular Cab, Short Box, 2WD, Z85 SLE - base MSRP: $18,025. Employee Discount Price: $13,926. Savings of $4,099 - 22.7%. Sierra 1500 - Regular Cab, Standard Box, 2WD, SLE, base MSRP: $26,810. Employee Discount Price: $19,861. Savings of $6,949 - 25.9%
With saving over 20% for each truck model I looked up I can see why GM's Employee Discount program is working so well for trucks. Maybe I should buy a truck... but I doubt it.
I heard a rumor that GM is thinking about going to a "menu" pricing. GM has gotten massive positive feedback on not having to haggle over price, that they may implement this starting with the 2006 model year. No haggle prices only work when people think they are getting a decent price because of it. So setting an MSRP and a "menu" price from the factory may be a touch thing to do. If you have no haggle pricing across an entire company, just set the MSRP lower and sell all cars "at sticker." Nah, that will never work. I look forward to seeing what, if any, no haggle pricing scheme GM comes up with.
Well, the GTO seems to be ineligible for the Employee Discount. Even when I caught it on the web site it received the smallest discount I saw, based on percentages. However, the discount doesn't put the GTO in price competition with the Mustang, so I would still go with the Pony car from Ford over a GTO. Price and and other reasons would keep me looking at the Mustang.
As for the CTS, I like it a lot. I would definitely visit a dealer and look into it. The Luxury Sport trim is expensive, even with the discount, at $36K. Let's compare it to the BMW 330i. I priced a 330i on BMW's web site and it was looking to come in very close to $40,000, which puts the Bimmer close to the Cadillac when comparing MSRP. Does a five grand GM "Employee Discount" swing a sale from the 330i to the CTS. Without test driving both cars I can't say. But from what I have read about these cars the answer is NO! I would be willing to shell out 5 large extra for the BMW's sweet, smooth and powerful engine alone. Even if it didn't come with the BMW's prestige and refinement. I don't think the Cadillac can stand up to it in back to back test drives.
Sorry GM. Build better cars. That's the way to get people into your showroom. As for trucks... I think you have something here. I can't see any reason why I should look at Ford or Dodge for a truck while GM is offering this special. Obviously Ford and Chrysler agrees because they started providing their own similar programs. Ford's "Ford Family Plan" and Chrysler's "Employee Pricing Plus" programs also run until August 1st... unless they all continue blowing profit for market share.