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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  • Snickel Fritz I just bought a '97 JX 4WD 4AT, and though it's not quite roadworthy yet I am already in awe of it's simplicity and apparent ruggedness. What I am equally in awe of, is the scarcity of not only parts but correct information regarding anything on this platform. I'm going to do my best to get this little donkey back on it's feet, but I wouldn't suggest this as a project vehicle for anyone who doesn't already have several... and a big impressive shop with a full suite of fabrication/machining/welding equipment, and friends with complimentary skillsets, and extra money, and... you get the idea. If you don't, I urge you to read up on the options for replacing anything on these rigs. I didn't read enough before buying, and I have zero of the above suggested prerequisites... so I'm an idiot, don't listen to me. Go buy all of 'em!
  • Bryan Raab Davis I actually did use the P of D trope, but it was only gentle chiding, for I love old British cars of every sort.
  • ScarecrowRepair The 1907 Panic had several causes of increased demand for money:[list][*]The semi-annual shift of money between farms and cities (to buy for planting and selling harvests)[/*][*]Britain and Germany borrowing for their naval arms race[/*][*]San Francisco reconstruction borrowing after the 1906 earthquake and fire[/*][/list]Two things made it worse:[list][*]Idiotic bans on branch banking, which prevented urban, rural, and other state branches from shifting funds to match demands. This same problem made the Great Depression far worse. Canada, which allowed branch banking, had no bank failures; the US had 9000 failures.[/*][*]Idiotic reserve requirements left over from the Civil War which prevented banks from loaning money; they eventually started honoring IOUs illegally and started the recovery.[/*][/list]Been a while since I read up on it, so I may have some of the details wrong. But it was an amazing clusterfart which could have been avoided or at least tamed sooner if states and the feds hadn't been so ham handed.
  • FreedMike Maybe this explains all the “Idiots wrecking exotic cars” YouTube videos.
  • FreedMike Good article! And I salute the author for not using the classic “Lucas - prince of darkness” trope, well earned as it may be. We all know the rap on BL cars, but on the flip side, they’re apparently pretty easy to work on (at least that’s the impression I’ve picked up). On the other hand, check the panel fits on the driver’s and passenger’s doors. Clearly, BL wasn’t much concerned with things like structural integrity when it chopped the roof off a car designed as a coupe.
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