General Motors Death Watch 48: The Price is Wrong

general motors death watch 48 the price is wrong

Regrets? GM's Vice President of North American Vehicle Sales has had a few. Then again, too few to mention. When quizzed about the wisdom of last summer's Fire Sale for Everyone, Monster Mark LaNeve said "Hindsight being 20/20, I probably wouldn't have done it." Probably? The campaign annihilated The General's fall and winter business and sealed GM's rep as America's largest discount car company. Which LaNeve now vows to fix by ignoring the connection between guilt and change and reanimating the company's short-lived "Total Value Promise" program.

Which is what, exactly? Although LaNeve's past rhetoric qualifies him for a job as the fifth Wiggle, and the specifics of the latest version of the Total Value Promise (TVP) await a Detroit unveiling, Monster Mark's been dropping hints. At the LA car confab, the slightly confessional marketing maven revealed the basics: lower sticker prices and a clear focus on comparative excellence. "We'll say, 'Best product, here's why," LaNeve said. "'Best price on an MSRP basis.'" What's more, "With every new product we bring to market, we'd like to price it very aggressively."

Not to coin a phrase, but the spin-out starts here. First of all, GM doesn't make the best products. While The General's camp followers will cry foul and cite various measurements placing GM vehicles head and fenders above the competition, the Chevrolet Corvette is the company's only undisputed class leader– and the $65k sports car division isn't exactly what you'd call crowded. Sure, GM's refreshed SUV's may turn out to be the business, but the majority of GM's products are also-rans. After all, if GM vehicles WERE the best of the best, the world's largest automaker wouldn't have to discount the damn things.

As for GM's plan to reduce advertised prices, well, we've been here before. In the brief period between Fire and Toe Tag sales, GM launched (pre-launched?) the TVP. Then as now, Monster Mark declared that GM's window stickers would be "closer" to the actual bottom line. The fact that this less-than-iron-clad "promise" was quickly and completely deep-sixed for yet another nationwide incentive campaign removed any chance consumers would believe GM's latest pledge. And why should they? You don't have to be a Keynesian economist to know that The General's inability to limit its supply guarantees a glut, which assures an eventual price cut. Lesson learned? Wait and prices will fall.

In fact, the whole concept of MSRP (Manufacturer's Suggested Retail Price) has been thoroughly discredited. Thanks to a seemingly endless succession of nationally-advertised discount campaigns, consumers now operate on the basis that a vehicle's MSRP is only an inflated starting point, or, if you prefer, meaningless. No one pays sticker. No one. How do consumers compare vehicle prices when they're subject to an ever-changing farrago of incentives and finance offers? The savvy ones go to independent websites like www.kbb.com, press a few buttons and sort it out. Given the confusion, volatility and newfound transparency of car prices, GM might as well lose the sticker and simply direct consumers to an appropriate website.

Obviously, legally, they can't do that. Equally obvious, strict TVP adherence is highly unlikely, veering towards impossible. Think of it this way: if one of GM's competitors reduces their prices with an incentive campaign, a TVP-faithful GM could only respond by lowering their advertised sticker price. That's not a strategy bound to please recent owners or dealers, whose livelihood depends on trying to maintain as much of the inflated MSRP as possible. It also flies in the face of common sense: what's built must be sold. If discounts are what American consumers need to get the iron off the lot, discounts is what they're gonna get.

The biggest problem with TVP is that GM is, as always, hedging its bets. Note LaNeve's use of MSRP as a measure of relative price; GM is not promising to have the best price relative to the competition in absolute terms. By the same token, LaNeve said he would "like" to price new vehicles aggressively, not that he 'will.' In truth, there's only one alternative to the current rebate-driven set-up: the no-dicker sticker. If GM really wants to eliminate incentives, they have to say 'this is the price for this vehicle.' Period.

You could certainly posit that much of the Fire Sale for Everyone's success was due to the [perceived] lack of price negotiation. You could also credibly maintain that non-negotiable prices assured the Saturn brand's initial survival. But you'd have a hard time arguing that GM's management has the stones to weather the inevitable fall-out from a no-haggle pricing policy, as dealers scream bloody murder and duff vehicles pile-up in their thousands. Bottom line: expect GM's TVP to fade into obscurity for the second time, replaced by yet another round of rebates. And once again, Monster Mark LaNeve will be left without regrets.

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  • Arthur Dailey For the Hornet less expensive interior materials/finishings, decontent just a little, build it in North America and sell it for less and everyone should be happy with both the Dodge and the Alfa.
  • Bunkie I so wanted to love this car back in the day. At the time I owned a GT6+ and I was looking for something more modern. But, as they say, this car had *issues*. The first of which was the very high price premium for the V8. It was a several thousand dollar premium over the TR-7. The second was the absolutely awful fuel economy. That put me off the car and I bought a new RX-7 which, despite the thirsty rotary, still got better mileage and didn’t require premium fuel. I guess I wasn’t the only one who had this reaction because, two years later, I test-drove a leftover that had a $2,000 price cut. I don’t remember being impressed, the RX-7 had spoiled me with how easy it was to own. The TR-8 didn’t feel quick to me and it felt heavy. The first-gen RX was more in line with the idea of a light car that punched above its weight. I parted ways with both the GT6+ and the RX7 and, to this day, I miss them both.
  • Fred Where you going to build it? Even in Texas near Cat Springs they wanted to put up a country club for sport cars. People complained, mostly rich people who had weekend hobby farms. They said the noise would scare their cows. So they ended up in Dickinson, where they were more eager for development of any kind.
  • MaintenanceCosts I like the styling of this car inside and out, but not any of the powertrains. Give it the 4xe powertrain - or, better yet, a version of that powertrain with the 6-cylinder Hurricane - and I'd be very interested.
  • Daniel J I believe anyone, at any level, should get paid as much as the market will bear. Why should CEOs have capped salaries or compensation but middle management shouldn't? If companies support poor CEOs and poor CEOs keep getting rewarded, it's up to the consumer and investors to force that company to either get a better CEO or to reduce the salary of that CEO. What I find hilarious is that consumers will continue to support companies where the pay for the CEOs is very high. And the same people complain. I stopped buying from Amazon during the pandemic. Everyone happily buys from them but the CEO makes bank. Same way with Walmart and many other retailers. Tim Cook got 100m in compensation last year yet people line up to buy Iphones. People who complain and still buy the products must not really care that much.
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