By on February 2, 2011

Former GM CEO Fritz Henderson may well have been a convenient punching boy in the aftermath of the Obama Administration’s firing of his predecessor, but at least the guy had a sense of obligation. Henderson was a consummate GM insider, but unlike Rick Wagoner, he realized that this status was as much a liability as an asset in the politically-fraught aftermath of the bailout. Nowhere is this more clear than in Fritz’s major contribution to GM’s public relations: in hopes of proving GM’s appreciation of its extraordinary rescue, Henderson committed GM to “open communication” and “transparency,” telling the US Senatewith the very first words of his testimony that

It’s our obligation to be open and transparent in all we do to reinvent GM, particularly with the American taxpayer as our largest investor.

Of course, The General didn’t always make good on that pledge, but at least Fritz made the effort to say he cared. Now, GM is taking the opposite approach, threatening to liberate the benighted public from the burden of its transparency. After all, the US taxpayer is no longer the majority shareholder in GM… even if, at 33%, we are still GM’s single-largest “investor.”

Automotive News [sub] reports

General Motors has settled on a strategy to quell industry chatter about a jump in its incentive spending: Disclose less.

GM sales chief Don Johnson said today that the automaker will be less forthcoming about its spiffs on a month-to-month basis. From now on, GM will talk about incentives and average transaction prices “directionally” but won’t discuss specifics.

This comes as reports that GM’s average incentive per vehicle grew 29 percent in January to $3,762, the highest among large automakers. Johnson acknowledged a “modest” increase but wouldn’t talk numbers.

“There’s been a lot of noise out there in the system about sources of data, competitors saying this or that,” Johnson told analysts and reporters on a conference call. “We’re just trying to take the noise out of the system.”

Or, it will increase the “noise” in the system, as industry-watchers speculate about GM’s actual incentive spend. Remember, nothing stops speculation like the truth… and only GM can provide the real truth about its incentives.

And this is not just a question of practical PR strategy or even an obligation to taxpayers… it’s about the competition. Just as GM announced that it would be less transparent going forward, Hyundai was stepping up and providing an unprecedented amount of information with its latest sales release, including a full sales-weighted CAFE number, and the brand’s fleet mix. If Hyundai continues to provide more information while GM restricts access to its data, who do you think is going to come out looking better? Remember, they do still call this the “information age.”

AN [sub] provides another way of looking at the situation:

Christopher Ceraso, a Credit Suisse analyst, might have summed it up best. He told GM officials that less transparency could be seen as a signal that GM is getting more aggressive on price and doesn’t want to set off alarm bells.

“Generally,” he said, “less disclosure is bad.”

UPDATE: The DetN’s David Shepardson points out that GM did give us some warning about this.

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11 Comments on “GM’s Transparency Pledge On The Fritz Edition...”

  • avatar

    You’d think that someone, anyone at GM would have learned something from Saturn.  Their no haggle pricing model was a pr boon.  Why not ax all incentives and drop MSRP to a point where consumers see there is a difference.  Perception is reality.
    The brainiacs at RenCen think that beating their chests and saying “we’ll just tell you less” goes over well?  Truly profound cognitive dissonance.

    • 0 avatar
      Acc azda atch

      If you remember…
      SATURN never made a dime,
      If they DID make money.. it was in the early years as the cars gained a footing.
      As far as no hagge goes, it made sense in the beginning when Saturn appeared as some new car company, when in fact it was a version of GM cars, with their own plant and separate advertising that never mentioned GM. It didn’t come out till later that Saturn was a wholly owned subsidiary of Generic Motors.
      It was all fine and good to not haggle for a price from a car company that LOOKED like everything they had was unique and or different, but fast forward 10+yrs later, when ya got Aura / Malibu, Traverse / Outlook, Sky/ Solstice, Venture / Relay, Vue / Equinox and tell me how its ok to fork over 3500-4g on the same Generic Motors produced car at a different stealership cause the badge on the hood is different than the one across the street?
      Just one #)(@*@&@(@)@ reason why that damn brand got shut down.
      Not worth the price of admission.

    • 0 avatar

      It didn’t come out till later that Saturn was a wholly owned subsidiary of Generic Motors.
      You make it sound like it was a secret.
      As I recall, from the beginning of the Saturn project they were very upfront that it was a GM subsidiary, although they did put considerable effort into clarifying that it had unique product and was run differently from their other divisions.

  • avatar

    GM learned their lesson from the bailout. They learned that no matter what, they will get bailed out and keep their jobs, Rewarding bad behavior just causes even more bad behavior,

  • avatar

    Loose lips, sink ships. GM is not showing it’s and that’s fine because you never see football teams calling plays so everyone knows, do you? Football teams have ticket holders just like share holder.

    Besides where does Hyundai rank, 4th this past year? Anyone want to 4th besides Ford?

    • 0 avatar

      That’s the kind of American lackadaisical attitude that has brought on fierce competition from foreign competitors and leaving American workers wondering why THEY get cut out of their jobs. Discounting Hyundai “just because” they ranked lesser than GM NOW doesn’t mean that will remain the same LATER. GM’s banking on the future of China’s auto-buying prowess, which means American workers will get cut when production moves over to China for cheaper production costs (as they already have started to).
      Remember, no one thought TOYOTA would ever dislodge GM from the top spot: those who did, were proven wrong as we all know now. Sitting back on their laurels is just begging for another collapse, starting with their stock prices plunging below their IPO valuation. If that happens, more people will dump the stock in panic, thinking that GM wasn’t as relevant as originally thought, and there won’t be any 2nd rescue for that company.
      One other last point: shareholders are NOT like football season ticket holders. Shareholders (of the voting kind) can influence the direction of how a company goes, as well as what kind of management is in place at the top. Your analogy fails on that point alone.

  • avatar

    GM marketing has always been more about ‘the deal’ than “the car”. GM’s pre-bankruptcy, cancerous resale values were a function of this. They’ve recently began to recover – but they need to be careful, especially with rising oil prices.

    • 0 avatar
      Educator(of teachers)Dan

      One of my favorite Car and Driver quotes (you know back when they were relevant) was when the 2nd generation Lumina was released; “Buying a GM car is like going to an all you can eat buffet were the only thing anybody talks about is the price, not what the food tastes like.”  This was after a lengthy paragraph talking about all the features which were standard on the Lumina. 

    • 0 avatar
      Acc azda atch

      Educator (of teachers) Dan:

      I have been following and watching your posts with enough regularity to find truth in what you have to say and or mention.

      But that comment alone, is one of your best.

      The Lumina was a gutless pile of crap that shouldn’t have even existed. Forget about its place being taken by the Impala with the tortured name and history. People only buy GM stuff cause its cheap and they have no expectations for anything better. That same thinking and low opinion of the customer / driver can also be said for the majority of the market, especially current versions of Japanese comparisons.

  • avatar

    Surely GM mgmt doesn’t actually regard their stated MSRP as the true value of their cars anymore than Ronco thinks their TeeVee vegetable peeler has an actual value of $29.99
    In private, they know what the avg transaction price is of all their cars.
    Strange how so many car enthusiasts earnestly talk in terms of incentives off of MSRP as if that MSRP is some kind of pure and realistic number.
    Yet we all laugh at such puffery from any other maker/seller of mass produced goods that are built mostly by robots on a JIT assembly line.
    All those other products sell at ‘no haggle’ prices at any given retailer and can easily be checked with a quick web search. Some consumers choose to pay more in exchange for time or location convenience but you can know the real lowest price with little effort.

  • avatar

    GM not talking about incentives really doesn’t matter in the giant scheme – other than from a credibility perspective maybe. The numbers (estimates) are out there anyway. This past fall, I was in a meeting with representatives from PR, IR and accounting of one of the US-based automakers (that shall remain nameless). Speaking to the senior sales analyst (the person on the monthly sales conference call), I asked how they aggregated their incentive data. The response was that they prefer to talk about incentives “directionally” as too much detail creates the expectation of disclosure every month and that can be bad in slow selling periods. BUT – when this person does disclose incentives publicly, they would be citing a third-party data source. So this automaker doesn’t even generate its own incentive data. They buy (or are given) it – like everyone else. Basically, the automakers don’t have any better data than what is published by various sources every month. I found that very surprising. I guess they figure why create the salary expense for a few extra analysts to crunch transaction data every month when there are multiple sources already doing it (and fairly accurately).

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