This GM "Fire Sale" No Hotter Than Current One
December 29, 2009
General Motors' convoluted $7,000-incentive offer to dealers to put remaining Pontiac and Saturn vehicles into their fleets and then sell them as used vehicles was described by the media as a fire sale. But Edmunds.com's analysis shows the so-called fire sale is no hotter than the prices currently being offered.
GM already has been offering incentives valued at up to $6,500 on Saturns and Pontiacs, including the always attractive zero-percent financing for up to 72 months, according to Edmunds.com calculations. In addition, consumers are allowed to write-off the sales tax on their new vehicle purchase now.
"The newest program is more hype than substance," said Edmunds.com Senior Analyst Jessica Caldwell.
Few Saturns and Pontiacs remain in inventory to purchase. At the beginning of December, GM had 5,838 Saturns and 8,672 Pontiacs in stock. Edmunds.com forecasts GM will sell 3,256 Saturns and 6,808 Pontiacs in December. That leaves only about 4,500 Saturns and Pontiacs in inventory.
The number of Saturn and Pontiac dealerships remaining is shrinking by the day. Edmunds.com's last count showed 289 remaining Saturn dealers and 2,050 Pontiac dealers. Were the remaining inventory of unsold vehicles spread evenly, Saturn dealers would have about nine each to sell; Pontiac dealers would average only a single car.
What the latest program, which was not announced publicly but was first reported by the Wall Street Journal from a December 23 email offer sent to dealers, is guaranteed to do is confuse consumers who read the headlines. Here's why:
Consumers do NOT receive the $7,000 in cash, but consumers do buy a used -- not new -- vehicle under this arrangement.
Yes, GM is offering $7,000 per vehicle to dealers on leftover Pontiacs and Saturns. However, dealers first have to opt to take the deal. Some dealers Edmunds.com contacted said they did not plan to participate; some did not have vehicles in inventory in order to participate.
If they do, they must put those vehicles into their daily rental or company fleets -- those vehicles rented or loaned to customers whose cars are in the shop for service, used to ferry customers to work or home during service or provided to dealership personnel. Dealers often agree to such an arrangement when they have provided vehicles for special events, like golf tournaments.
After putting on some miles, those vehicles then are sold as used vehicles. The dealer can choose -- or not -- to use some of the $7,000 to discount the vehicles or provide more wheel-and-deal room for the customer.
Right now, a buyer of a 2009 Pontiac G6 GT with a V6 engine that lists at $25,430 could be had for about $17,436, according to Edmunds.com's analysis. A used one under the move-to-fleet program wouldn't be discounted all that much more.
"There is no benefit for the consumer to purchase a used vehicle when a new vehicle can be had for a similar price," noted Edmunds.com's Caldwell. -- Michelle Krebs, Senior Analyst and Editor at Large
Source: Edmunds.com
Photo by GM
2009 Pontiac G6
Posted by Michelle Krebs at 12:01 PM under Analysis , GM | Comments (0) | digg this | Seed Newsvine
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