Here is a good editorial from Motley Fool regarding this incentive.

http://biz.yahoo.com/fool/060524/114...%3D2&quicken=2

I tend to agree with this view point. I am having a hard time understanding why GM would have included some of the higher MPG sedans in this program if they were selling as expected or better. There is obviously some concern with the overall sales off all the models included in this program, otherwise I don't see any justification for including them. Why give money back on product that you are selling better than expected and making money on? Doesn't add up to me.

GM has been relying on incentives and rebates for sevaral years now to try and keep it's market share lead. The end result of these programs has been flat sales and decreased earnings. The only way GM to keep things from sliding further is to change it's overall consumer appeal. I think Chrysler and most recently Nissan are great examples of this.

I realize this is only 2 targeted states, but my guess is that if the trial run is successful in these two states at increasing sales, then they won't hesitate to roll it out coast to coast.

 

You hit the nail on the head, at least for me. Its one thing to have rebates, but completely another to encourage people to use more natural resources. In an increasingly 'green' society it will be interesting to see how this effects GM's long term image, especially in California.

 

It was too early for the EV-1 cars.

It is too early for Larry Burns' and Chris Borroni-Bird's AUTOnomy car.

It is too early for Americans to see the immorality of paying someone off to buy your product.

In the meantime the rest of the world moves forward to embrace new technologies. They see how silly it is to drive a 400hp truck to do grocery shopping and how silly it is for a couple to live in a 4,000+ sq. ft. house with 5 bathrooms.

GM will survive. Will the American economy and environment survive ?

 

Well, the fact that GM would stoop to this isn't half as bad as the concept that some people would fall for it. I can honestly picture some family members (who thankfully don't live in CA or FL) pulling up in some behemoth, grinning from ear to ear about how much money they're saving on gas.

The other sad fact is that they don't just knock $1000 off the price tag, but that's the way we think. We think it's free money when we get it back as a rebate. We don't make the connection that it's money we already spent.

It's also not like GM isn't getting anything out of this. To get it, you have to sign up for OnStar, according to that Motley Fool article. Is that a premium-price service, or is it included for free? One way or the other, GM is getting real-life fuel consumption data in two major markets. That's bound to have some value.

 

its normally free for the 1st X months, at least. Maybe a year. They've started to offer tiers of service to add on, but the system is always there and they can almost certainly still 'pull' data whether you subscribe or not.

 

The way I see it, it isn't "free". Monitoring for the first year and the hardware and installation costs are included in the price of the car (plus mark-ups).

If the Hondas I love included OnStar, I would not buy them unless they gave me the option to opt out from it, with the proper amount credited.

 

Matin, your composure in addressing these issues is astounding. Thanks for the excellent and informative replies.

I guess I'm having trouble distinguishing between this an any other rebate scheme. So if someone in another state took their $2500 rebate and funded say 10-18 months of gas with it, would we have the same objection? I seriously doubt anyone is going to drive any more than they normally would just because of the rebate. 98% of them will use the same amount of gas they would have otherwise, just GM foots part of the bill. This isn't about gas - it's an OnStar promotion. They get people to sign up, and when the gas "rebate" is over, 90% of them will keep the service.

If you're disgusted with large SUVs in the first place, nothing GM can do will be satisfactory. If the company does not stay in business, they will not have the chance to reshape themselves to be the company they need to be - with a more balanced product line. For now, these vehicles keep the lights on an paychecks flowing. We, the buying public, cast votes with every purchase we make. Companies will not make what we will not buy. Change our attitudes, change what we buy, and the companies will change what they offer. It's not GM's falut for offering what Americans buy. If they didn't, you bet Toyota would.

 

It's not just about the market realities- will this cause people to buy more H2s or H3s? Because it's such a small slice of the market, GM probably knows already just how many cars of these types they will ship to those dealers in those months and the issue is mostly what price they sell at and how long they sit on lots, so it doesn't bother me that GM is coming up with incentives for Hummers.

What bothers me is the way they've done it, and the message it sends to the people who buy those Hummers and anyone else who hears about this deal- spend more, use more, consume more, waste more, take, take, take. There's plenty of that in the world already, and the LAST thing we need right now in our society is someone going around paying people to encourage that kind of attitude toward the world.

Think of the way parents pay their kids for doing chores. What if the amount of money you made was based on how much mess there was when you started, so if you slopped a mess everywhere right before you started to clean, you made a lot more than if you kept it neat in the first place? That would encourage mess- just imagine the stains that no one could ever get out. Or if instead of paying sales tax, you were paid sales tax. People would run out and buy all kinds of things they couldn't afford so that they could get the tax back, and completely miss the part where they end up with much less money in the end.

Anyone seen a movie called 'Brewster's Millions?' Maybe you'd understand what I mean. It's a fun idea for a movie, maybe, but at the same time horrifyingly wasteful and absolutely crazy.

 

I guess this was the point I was trying to make at the start. In my view GM is not, and has not, been making the cars that Americans want for a while now. Their solution to the problem has been to move the cars with rebates and incentives. Toyota on the other hand has been making cars that we want, not just hybrids, which is why they have chipped away at Ford's and GM's market share fairly aggressively over the last 5 or so years.

In my mind this was just another example of GM trying to find a quick fix to their problem. While I am not in the "know" my belief is that GM is having problem meeting the sales projections for the models offered in this package, which is why they are running this promo. If this was just an OnStar incentive it would be offered on all models.

GM has trying to move their product for several years now through incentive laden deals and rebates. I am just wondering how much longer GM thinks it has to finally put a product in their dealers hands that people want. Where is GM's Camry? In the past it was GM trucks, but that is also starting to erode. The folks at GM need kick it into gear or there are going to be alot of hard working Americans on the unemployment line. Given the current fragile nature of this economy, GM going under would not be good for any of us.

 

Just curious... How do you know of Larry Burns and Chris Borroni-Bird?

Peace,

Martin