Ever pay sticker price for a car? Raise your hand...we'll wait.
That's what I thought.
The automobile industry taught us decades ago that the price on the window sticker had no meaning and that the customer's job was to extract the lowest possible price from the salesman through a complex kabuki exercise. Most people, and almost every woman I've ever spoken with about it, found this unpleasant, intimidating and just plain stupid.
Yesterday, Mark LaNeve commented on GM's new "Red Tag Sale" program on the Fastlane Blog. Included in those remarks was this line:
This simple, consistent offer, along with the “what you see is what you pay” concept is the kind of straight-forward approach to pricing that people really appreciated about our earlier programs.
Now, I know I'm not breaking any new ground here, but why does it take a special program for an industry to provide the customer with "what you see is what you pay" pricing? What if GM just made this a permanent policy and backed it up by eliminating all the, "I'll see if I can get my manager to accept that offer" shenanigans? The Sale comes on the heels of last summer's "Employee Discount" scheme. Yesterday's Wall Street Journal said this about the Employee Discount results:
All three U.S. car makers enjoyed a surge in sales this summer when they offered customers the same prices they had previously given their own employees. That boosted sales but cut deeply into profit margins, especially for GM and Ford. Each reported massive losses in North American in that quarter.
So, the Red Tag Sale, and the Employee Discount program both point to a more fundamental problem: customers don't want to pay the prices GM needs to receive to make their cars profitably.
Gimmicks aside, the only thing that can now save GM from its current spiral is Bob Lutz's attempts to design attractive vehicles that customers will actually pay for.
Tags: GM Red Tag Sale
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