Dealers Clear Out 04 Models With Incentives
The clock ticks extra fast in December for automotive manufacturers. It’s a time when the following year’s autos are on the lot, and any current year models begin to stand out like a sore thumb. December, therefore, becomes a crucial month for automakers to offer consumers deals to clear out excessive inventory.
“December is a very competitive time for the auto industry,” said General Motors Corp. spokesperson Deborah Silverman. “You’re closing out the calendar year, so most manuafcturers will have one sort of an incentive or another to be competitive with each other.”
GM is running perhaps the most drastic incentive and publicized program of the month, The GM Red Tag Sale. The promotion runs through Jan. 3, and offers cash bonuses up to $7,000, deals on leases and discounts for consumers who make a purchase through General Motors Acceptance Corp.
Buick, Chevrolet, Pontiac and Hummer brands are included in the deal, while GM’s Saturn division is running a similar lease program that incorporates its no-haggle philosophy.
Dealers received promotional materials such as outdoor banners, showroom signage and red tags for the cars, which clearly mark the MSRP and sale prices. GM is promoting the event through national TV, Internet, radio and print ads in its largest 75 markets.
GM needs to get inventory off its lots after reporting a 13% drop in its U.S. sales for November. In contrast, Japanese automaker Toyota is running its annual Toyotathon because it is a traditional program.
“Toyotathon has been around for years, but it doesn’t reflect a need for us to clear our models,” said Toyota spokesperson Xavier Dominicis. “It’s an event that takes place every year and is not tied to our inventory.”
Toyota is also a brand that does not rely on incentives to get customers on their lots.
“We like to price the products right the first time so we don’t have to incent consumers to make a purchase,” Dominicis said.
GM and Toyota both said their incentives vary based on location. In GM’s case, Silverman said each dealer sets its own sales price based on what it needs to get off that particular lot. Toyota dealers are also allowed to create their own sales prices, Dominicis said. (Toyota’s four sales regions have staggered start dates for Toyotathon, though the range is only within a few dates.)
As a general rule, Dominicis said Toyota does not publish its incentives. But, according to Toyota’s Web site Buyatoyota.com, a consumer in the Portland, OR, area can get $750 customer cash back on the purchase a 2005 Corolla, while a consumer in Southern California can get back only $500 on the same vehicle. Consumers in Connecticut can receive up to $500 back on the same vehicle.
Ford Motor Co. fits the mold as an automotive manufacturer that would need to run an incentive sale, based on its 2004 numbers. Through November, the automaker’s year-to-date U.S. sales totaled $3.04 million, down 5%. However, Ford spokesman Dave Reuter said it did not see a need to run an end-of-the-year sale as “crazy” as GM’s Red Tag Sale to clear out 2004 models because inventory levels are where the manufacturer feels they should be.
“We announced a number of programs at the beginning of month, but haven’t seen a need to clear out inventory,” Reuter said. “Everyone seems to forget that we expected 2004 to be a down year and that we were focusing on our new 2005 product launches. The moral of this is we knew we were going to reach a low point and build ourselves back up.”
New Ford Motor products now on the road include the all-new Ford Mustang, Ford GT, Ford Five Hundred, Ford Freestyle and the redesigned F-Series Super Duty; the all-new Mercury Montego and Mercury Mariner; the all-new Ford Escape Hybrid SUV; the Land Rover LR3; the Volvo S40 and V50; and the long wheelbase Jaguar XJ. These new products are part of an unprecedented roll-out of new vehicles that will continue in 2005.
