Employee pricing was a terrific idea that will do anything but hurt the auto industry. Essentially, EP has simply replaced typical model year end cash back rebates that are usually offered this time of year anyway. The term “year end rebate” has been so diluted over the years and is now completely ineffective. With the new model year cars about to hit the showrooms, the industry needed a way to offer discounts that would actually attract customers and sell excess inventory. With rebates, most customers will tend to haggle further for even higher discounts on top of the rebates. EP has totally curbed this propensity as consumers assume that the price couldn’t possibly get any lower. Some really great deals were made by consumers smart enough to push the dealers. The big three auto makers have problems, but employee pricing promotions aren’t one of them. As long as they’re moving cars (discounts or not), they and the dealers will be happy. The dealers get a large back-end pack (that consumers don’t know about) with every car sold. The promotion has been wildly successful, so look for the same thing next summer. Also, I have not heard of any price inflating (to make the discounts seem larger) from any of the dealers I work with.

I heard today from a buddy of mine that GM has extended the program until as late as Labor Day. I also heard Employee prices were raised for this promotion. Can anyone confirm this?

I think car salespeople make the process so intentionally convoluted that at the end of the process you'll easily pay more $ just to get it over with.

I think that this always might be trying to work on another level. One in which the car dealer is trying to put their employees and customers on the same plane. It may seem like a bit of a stretch, and maybe I'm totally wrong. But I don't know a single person that goes to a car salesman and feels like he/she is getting a good deal. On the other hand everyone sees that salesman as their enemy they need to overcome enroute to getting a new car. So maybe, even if it's just a small bit, this also works to give those employees and more human charateristic and a way to attempt to relate to their customer. I didn't think that it would really be that great of a deal, but it prompted my parents to turn in my Mom's two year old Envoy for the new Denali model. So I guess it's working for them, and may not really have a negative connotation.

I will probably never own a brand, spanking new car, not even a high end model. Certified Previously Owned model perhaps, but never brand new, thanx to my father whose been in the industry 30 years now. The employee discount is a way to have upfront pricing without stealing saturn's gimmick. Avoid the negotiating and price haggling, beef up 2nd/3rd quarter sales before the end of the year clearances in October, which offers more consumer savings, but you already bought a car this summer so you're SOL. the "Employee price" was always available to those in the know, but the average buyer is intimidated by the process and this promotion has made their buying decision a lot easier and quicker.

Mark- jsut heard that the promotion is going to end on August 1st, but the damage is already done.

Oh, and Kim? Beer is never a digression! :D

Every single freaking dealership in town is offering employee discounts! What a scam! I'd be pissed if I was an actual employee. What do they get? An unemployment discount?

Part of the problem with the success of the Employee discount programs, is it lured buyers who were going to wait 3-6 months into buying now... So they are exhausting future sales for the year to some extent. I only see death and destruction for GM - as it were. Chrysler will probably be ok... Ford, well, it was never ok so that's fine.

I'd be curious to know where most of the discounting came out... how much this is hurting the dealership's margins...

Also what effect it had on foreign car sales... if they tried to match prices or are just going to ride it out.

Not to digress, but I recently took the kids to a pro-rodeo and the beer might as well have been water. You had to drink like 7 of them to catch even the slightest buzz and then wait in long lines for the poddy... sorry I digress. GOOD BEER ONLY PLEASE! Talk about bilking the consumer.

And asked for beer, Shaun? Quality is the name of my game. ;)

I suppose I should comment too! :P Frankly, I hate cars. Period. And I live in a region where getting around requires it. I agree with Jesse - buying a car makes me feel ripped off. So I do commend GM and Detroit for offering a unique sale that essentially treats customers like employees. Very different. Eye catching. The only problem is I've been in the industry indirectly (having copywritten for insurance companies) and have buddies that sell cars. Auto industry employees are not treated well, at least on the retail dealership side of things. So this marketing idea still hold negative connotations for myself. I think both consumers and producers alike can learn alot from the goings on in the auto biz. Heavy mark-ups and bad feelings. So who's in for a revamp?

I see people going to used cars--the decreased price on new cars will crash the price of old ones. Of course, this could lead to people hanging onto their old cars longer and thusly not buying a new one. It seems like GM is leading this price break war because they're stuck with excess inventory and are desperate to unload it. I bet they'd even dump it at a loss with rebates if, come September they're still overloaded. They should close down most of their lines of cars--they all canabalize their other brands. How many mid-sized cars do you need? Why make trucks under GMC and Chevy, and Cadallac?

Oo oo oh, and about Caper's comments, the beer business has been discounting, and now all of a sudden a huge flock of consumers want cheaper beer and are downgrading. Will we see people going to used and discount cars when all is said and done with the car price wars?

I'm as jadded as Bonnie. In terms of set prices, Saturn tried to do it when they launched. The whole auto market needs a revamp. The idea of haggeling and not getting the best price is not the most alluring part of buying a car.

Capers nailed it. This "employee discount" is like a coupon for the car industry. They will sell more iron but it erodes loyalty. Especially since the manufacturers have such similar product. What do you care really if it is an Escalade or a Navigator if you are getting a rocking deal? They'll pay for this maneuver like the airlines did with fare wars.

From what I understand the discounts were better than average. The pricing however soes nothing for the underlying problem. What you get in the dealership is always hit and miss. I just bought a car recently and had a really good experience, bot I hear horror stories all the time. The pricing was a big hit but what do you do next?

I'm with Bonnie - I have to wonder how much of a break consumers get. I'm the type of consumer that when I see an ad campaign (especially local ones) that says the company will "pay your taxes" or "lowest price ever" or something, the products prices were jacked up to give you the impression of a discount when you're really paying what they wanted in the first place. And if ANY of you has ever worked on the "other" side then you know what the mark-up is... for example, do you know how much a cup of coke at any "fountain" costs (includes movie theaters and gas stations)? 5 Cents!!

The thing that gets me is that are these REALLY employee prices? If they are, it's probably for your typical level-1 employee - so how much of a break are you really getting? This is a gimmick that is so played that I'm getting bored. It seems like every year there is a new summer bonanza hyped-up sale to get rid of stock so they can make way for new models coming in.

Mark, I think this is a very bad strategic move. Kevin, while it will sell cars in the short term, It is like heroin- they will be looking for more sales inducing drugs and eventulally will have to ween themselves off of deep discounts. GM finds themselves in a situation where they don't have anything really exciting to generate demand. They need to close a significant amount of thier dealerships and cut back on production in order to be more competitive in the future. Not something they are obviously jumping to do. So in the mean time, they take the pricing drug of choice- Employee pricing.

It was a BRILLIANT idea! Precisely the reason every other car manufacturer has completely copied the same idea.

everyone feels ripped off when they buy a car -- all car dealerships depend on people who get sold lots of stuff and pay premium prices - so the channel depends on it being that way. How to you make someone feel like they are not getting swindled but still give room for sales margin at the dealership? How do you account for the price of cars being different in almost every geography etc etc -- maybe this has a few reasons for becoming such a popular advertising idea... does it work? I dunno.