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GM Shifts Away from Incentives

March 22, 2005

DETROIT -- General Motors' CEO Rick Wagoner said he will put an end to the large incentives that have been offered to consumers in the last 3.5 years.

GM executives admit that $5,000 cash bonuses offered with high sticker prices no longer have the same impact they once did, reported Automotive News.

The manufacturer has cut its 2005 profit forecast by 80 percent and will move to value-based pricing instead. This strategy will include:

  • Giving new products prices that are closer to anticipated transaction prices

  • Increasing advertising on launch models to rebuild brand recognition

  • Targeting incentives regionally and by specific model

    "The problem with incentives is that everyone follows very quickly, so there's not a way of creating a difference in the consumer's mind," CFO John Devine told Automotive News.

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