February 27, 2006
Like a lifelong smoker that keeps swearing to quit, General Motors just can't kick the incentives habit.
The automaker keeps saying it is going to go cold turkey and give up the rebates, "employee discounts" and other sales promotions that move the merchandise but drive down profits. But it's easier to say than to do, especially as sales continue to fall.
According to mid-month figures, General Motors had a 1 percent sales decline in February, better than the industry as a whole but not good enough. Cars and SUVs are building up on dealer lots, putting pressure on GM to do something.
Thus, GM says it will revive its March Madness Sales promotion and has told dealers the program will include a nationwide discount and big customer incentives.
The GM sales promotion is tied to the NCAA basketball tournament and will run from March 15 to April 4. Last year GM ran a March Madness promotion that included lower sticker prices on select models across GM's eight brands.
The 2005 March Madness program also included cash bonuses of $500 to $1,500 on models that had been on dealer lots for more than 125 days.
This year, GM plans to also offer between $150 and $700 in cash incentives to dealers who accept extra vehicles in the last week of February as the automaker tries to reduce inventory.
Just last month GM announced efforts to move away from incentives by cutting prices on most of its vehicles in and effort to reflect the price consumers actually pay.
GM has been losing U.S. market share to foreign rivals as it struggles with high labor costs and declining sales.
Like GM's Red Tag clearance sale in December, the March Madness program will require dealers to place an extra price sticker on each vehicle that is eligible for the discount.
