By on August 3, 2005

Will customers enter the new GM matrix?  I should have seen it coming. How could GM flog its remaining '05 cars, trucks and SUV's at anything other than the Employee Discount for Everyone (EDFE) price? As we've said here before, you can't very well raise the price on an old product when its replacement is heading down the pike. Besides, Ford and Chrysler are continuing their Grab Your Checkbook and Work for Us programs through the summer. So the extension of GM's EDFE program until September 6th makes perfect sense. My bad for believing GM's public promises.

Speaking of which, The General is revving-up its "Total Value Promise" program. That's right, GM's post-fire sale 'Value Pricing' program has evolved. Originally, The General was simply going to lower '06 sticker prices to reflect the products' actual purchase price after [what would have been] incentives. Now, the automaker is saying they've "lowered prices, added features or redesigned over 50 GM models" so "you get more without paying more on the cars and trucks you really want."

The Australian children's entertainment ensemble will be well pleased; never in the course of corporate history has a company created so much wiggle room. All that's missing is the conjunction "and/or"– and you just know it's there in spirit. More specifically, a new GM product might have a lower sticker, or new features for the same sticker, or new features for a lower sticker, or a redesign with new features for the same sticker, or a redesign without new features for a lower sticker, or… the mind boggles. And that's before regional discounts or cash back allowances.

I'm also more than a little impressed by the phrase "on the cars and trucks you really want". What about the cars and trucks people DON'T want? I thought the whole point of incentives– I mean 'a value promise' was to off-load the losers. Correct me if I'm wrong, but isn't the new Chevrolet Corvette one of those cars customers "really want"? And wasn't it excluded from the EDFE program? No wait, the 'Vette's been redesigned, so GM draws a "Get Out of a Lower Sticker Price Free" card. But hang on, the 'Vette was redesigned for '05. Does that mean the new Value Promise is retroactive?

Confused? So what else is new? GM singularly fails to grasp the fact that the public's imagination was captured by the EDFE program's simplicity. The "You pay what we pay" message eliminated most of the confusion and stress of wading through the incentives morass. EDFE wasn't a return to Saturn's old no-haggle pricing, but it was damn close. (One suspects many EDFE customers treated it as such, much to dealers' delight.) The EDFE elevated The General in its customers' estimation, allaying their suspicion that all those complicated incentives were designed to fool them into thinking they were getting a bargain when they weren't.

Which was true. The only way you can judge a car's value is by comparison. It's no coincidence that GM products' official sticker price has been higher than their direct competitors'. That way GM can take money off the 'suggested' retail price to bring the GM product down its competitor's level AND make it seem like customers are getting a "deal". For example, in 2005, the Pontiac Vibe stickered for $1k more than the Toyota Matrix, leaving a nice pad for discounts. Will the Value Promise program end this faux inflation? It's doubtful.

Before Value Pricing morphed into "We Give You Our Word That This Price Represents Excellent Value", pundits were saying that the move towards realistic stickering was motivated by the Internet. GM's official prices supposedly put them at a disadvantage during electronic price comparisons. Not true. The General's websites include a program that calculates post-incentive pricing. More importantly, savvy web shoppers have been heading for sites like kbb.com to scope the dealer invoice for quite some time. Which they will continue to do, Value Promise or not.

The point is this: GM didn't so much miss the honesty boat as get on it and then hop off mid-river. If The General had created a program in the spirit of EDFE, they would have capitalized on the public's good will. The Value Promise pisses on pricing clarity and further sullies GM's rep. No doubt the program will succeed in some cases, and fail in many others. Creating a class-leading product that makes its competitors look over-priced is the only strategy that works in every case. Hey Rick, what are the chances of THAT happening?

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