GM ‘Employee Discounts’ Boost Auto Sales to June Record

Jul. 2–General Motors’ employee discount helped push the auto industry to its best June ever for new car sales at more than 1.7 million cars sold.

GM led all manufacturers, selling more than 550,000 cars and increasing its sales over last June by 46 percent. The increase was 41 percent when adjusted for one less selling day in June 2004.

The June sales performance pulled the world’s largest carmaker into positive sales for the first time this year. Sales are up more than 2 percent over the first six months of 2004.

“We were a little bit surprised at the number,” said GM spokeswoman Deborah Silverman. “We were grateful that the number was where it was.” Ford saw its sales increase by less than 1 percent, its first monthly gain this year. Some of that was due to the extra selling day this June vs. last June, but Ford’s numbers don’t account for that.

Ford sales analyst George Pipas said things would have been worse for Ford if not for GM’s employee discount promotion.

“I take the view that GM’s extensive advertising raised consumer awareness that June was a good time to buy,” Pipas said. “In May our sales were down 10 percent. I think that probably most manufacturers reported higher sales.” DaimlerChrysler, Toyota, Honda, Nissan, Hyundai and Subaru all had higher sales in June. Volkswagen, Suzuki, BMW and Isuzu saw sales drop.

“Overall it was a great month,” said Jesse Toprak, senior analyst for the automotive Web site www.Edmunds.com. “GM surprised everyone.” Toprak said one concern is that a lot of the June sales may have been to people intending to buy in July. “It’s going to be interesting to see how July works,” he said.

The DaimlerChrysler group saw its sales increase 1 percent after adjusting for the longer sales period for June 2005. It was led by a 33 percent increase in sales of the Jeep brand and a 16 percent increase in sales of the Chrysler brand. Dodge sales fell 15 percent. Chrysler group sales for the year are up 5 percent.

Toprak said Chrysler might have done better if not for GM.

“Chrysler has been experiencing solid increases year over year,” he said. “They had barely an increase this month. They were basically flat.” To counter that, Chrysler is taking a cue from GM and extending its own employee discounts.

“Obviously you’ve seen the volume that (GM) had with the program,” said spokesman Kevin McCormick. “A lot of that traffic was our traffic. We would not want to see our customers or potential customers go somewhere else. We think that our program will be more attractive to customers.” Chrysler has fueled its sales success with its products, in particular the Chrysler 300, Chrysler Town & Country, Dodge Magnum and Jeep Grand Cherokee. GM’s sales have leaned on deep discounts and special offers as it tries to clear out its inventory of 2005 models.

Analysts and executives expect GM to extend its employee discount program beyond Tuesday, but Silverman confirm that. Ancira-Winton Chevrolet Vice President and General Manager Lino Liberatore said he expects the program to be extended due to its success.

“If you take a lady to dinner and you have a great time, you want to take her out again,” he joked.

Liberatore also said he would not be surprised to see other manufacturers adopt GM’s program. “These guys typically don’t rest on their laurels,” he said. “If (carmakers) see somebody being successful doing something, they’re going to do it too.” Toyota is continuing its sales onslaught with few if any incentives on its vehicles. The company’s Toyota, Lexus and Scion brands saw sales increases of 10 percent. For the year, sales of Toyota’s brands are up 11 percent.

Toyota Motor Sales President Jim Press credited GM’s employee pricing with driving some traffic to Toyota, where the products take over.

“We’re building products the customers want,” Press said. “It sometimes sounds corny, but that’s what we do.” He said growth areas have included the Scion, which helped Toyota move into a younger market and its full-size Toyota Tundra. The Tundra will be built in San Antonio starting in 2006.

Toyota has also been trading on the fuel economy of its gasoline and hybrid gas and electric vehicles.

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