OnStar is free for the first year of ownership. The OnStar Vehicle Diagnostics program is what the buyer has to sign up for in order to get the promotion. And that costs.......Nothing. It's included in the OnStar subscription but has to be specifically requested by the customer. It sends you a monthly email detailing the condition of several systems on your vehicle.

Peace,

Martin

 

Sadly I read this compliment after replying in anger to a post on another thread. I'll probably end up apologizing tomorrow when I'm over it, but for now I'm enjoying being p.o'd at the guy. Oh well, the bloom is off the rose. But thanks for the compliment. I'll try to live up to it.

Bingo!! You nailed it. For the SUVs in the promotion, the offer addresses the one concern that might have them re-considering the purchase. Remove the obstacle and you sell the vehicle. The real butter on this biscuit is that some technologies and features are difficult to promote without getting the customer to experience it first. By giving away OnStar on every vehicle for the first year and by including the OnStar Vehicle Diagnostics package as a customer select no cost option on any OnStar account, GM allows the customer to experience OnStar and then decide if it's worth the $15 or 16 a month to keep it after the 1st year.

Tim. This is scary. We're starting to think alike (Hope that doesn't get you in trouble)

Peace,

Martin

 

Of course, the thing that could really bite GM in the rear-end is the unpredictable fluctuations in gasoline prices. If things stabilize in the Middle East, gas could go down to $2.00/gallon. But if the faux-cowboy declares war on Iran *or* the fragile House of Saud falls to Al Qeda, gasoline could easily spike to $6-$8/gallon. If the latter happens, GM is truly screwed.

 

Actually in that scenario all the domestic automakers are screwed. So would be the US economy. Not just because of the impact on the automakers and suppliers, but in the escalation in price on anything plastic and anything that requires an over the road or airline based delivery service. The cost of oil would completely shatter the cost structure of the delivery industry.

In my opinion, the single biggest threat to GM is the resolution of the Delphi bankruptcy. A Delphi strike would do more damage in a shorter amount of time than would a shock in oil prices. A Delphi strike would really only impact GM, not so much the other automakers, whereas an oil price shock would impact all, as well as many other industries that most people would not consider to be oil dependent.

Peace,

Martin

 

Well, you and GM take a beating here. We'll cut you some slack.

LOL! It's about to get scarier - and maybe more trouble for me. I went out to www.fueleconomy.gov and just wanted to satisfy my curiosity. I took a survey of the combined mileage ratings of some SUV's and Trucks. Now I'm not an expert on exact model comparisons, but I tried to make it comparable.

SUV
GMC Yukon AWD: 15 MPG
Ford Expedition 4WD: 15 MPG
Chevy Tahoe 4WD (5.3L): 17 MPG
Toyota Sequoia: 16 MPG
Nissan Armada: 15 MPG
Lexus LX 470: 15 MPG

Huh. Tahoe has the best.

Trucks
GMC Sierra 1500 AWD: 15 MPG
Ford F150 4WD 5.4L: 15 MPG
Chevy Silverado 1500 4WD 5.3L: 16 MPG
Chevy Avelanche 4WD: 16 MPG
Toyota Tundra 4WD: 16 MPG
Nissan Titan 4WD 5.6L: 15 MPG
Honda Ridgeline: 18 MPG

I don't see Toyota or Nissan head and shoulders above the American counterparts.

I was pondering this on the ride home. There's a fundamental, underlying root problem here that we seem to be attributing to GM out of convenience. If I were to levy one criticism on GM, is that they've let themselves be beaten to the hybrid market by at least 6 years. Toyota has equally low-MPG vehicles to offset the higher ones, they have some balance in their product line representing both ends of the spectrum. I think that's fair.

However, to just bash GM for no other reason than we've self-nominated them as the poster child for all that is wrong with America's ecological and oil-dependence battle is getting silly.

The underlying root cause is the individual and our culture. We live in, and in many respects subscribe to our cultures message that we need more. Bigger home, more cars, faster cars, larger cars...There's a lot of self going on and not a lot of we. Our desires, or the desires we've been talked into believing we need to have, create the market. Where there is a market, someone will fill the need. So it was American companies to get to this market in a significant way. Rest assured, Chevy didn't make a Surburban, Toyota or someone else would have.

If we change the demand, we'll change what's offered. If we don't, then we give any low-mileage auto maker no reason to do any different.

Peace. (see, the transformation is beginning...)

I am NOT the official voice of GM hybrid issues...
I am NOT the official voice of GM hybrid issues...
I am NOT the official voice of GM hybrid issues...

 

It is no surprise that much of GM's problem is an image issue. They appear to invest most of their resources into designing and marketing their truck/SUV line, making their SUV's more visible and thus a scapegoat for the whole SUV debate. Nothing stands out on the road like a yellow H2. This rebate really helps give us greenies ammunition.

I also agree that a balanced line of auto's is the main thing that GM needs. While the quality of their car line is improving, and Martin will talk all day long about how the EPA highway ratings for the Malibu is equal to or better than Accord, the simple truth is that they do not compare from an appeal standpoint. Pick up Consumer Reports or any car magazine and this is reinforced. I know people say that GM should stick to their strengths and continue favoring their truck line..... but with the American consumer shifting towards smaller and more efficient transportation, is this a good strategy?

I've said this before.... I grew up in a GM family and was one of those teenagers who would read Car and Driver and steam over their alleged bias toward Japanese and European cars back in the 80's and early 90's. 20 years and many unreliable GM cars later, and my entire family now happily drives Hondas. Same story all over America..... I look forward to seeing what GM does in the next few years, but forgive me if I remain skeptical.

Martin, I too appreciate the valuable insight and counterpoint that you bring to this board and hope you don't get too discouraged by our constant beating on GM..... The beatings will continue until moral improves.........

 

Can't argue with anything you say here (except that I'm more prone to point out that the larger Impala also has better f/e than Accord ). Your point around appeal and Consumer Reports ratings is something that gets vetted around here on a daily basis. There are concentrated activities on improving on both these metrics. You will soon see some exciting things happen wrt the Malibu nameplate


It would be a poor strategy if it were the only or predominant piece of the overall strategy. Neither of those things is true. From a business perspective, you make money where you make money and you develop new opportunities in line with market demand by reinvesting the money that you make. A gross over-simplification, but still true at the root.

NO!........Oh, alright. You're forgiven

Actually I really appreciate the open-minded dialog that many of you are willing to engage in. I don't look at it as taking beatings. I'm learning a lot from many of you and hopefully I'm able to provide new learnings from a different perspective.

Peace,

Martin

 

But ... it's still an Impala! The Accord will be more reliable in the long run and have a higher residual value when you do replace it. The f/e of the Impala is NOT better than the HAH nor is it an AT-PZEV for those of us who care about such things.

Addendum:

Actually, if you compare apples-to-apples, you have to get the 3.9L V-6 in the Impala with 242 hp to match the 244 hp of the 3.0L V-6 in the Accord. The f/e ratings compare thusly

Impala 19/27
Accord 20/29

Comparing like with like, the Impala does not have better fuel economy

 

I want to second what Archslater said concerning the very visible marketing of the trucks and SUVs, but the perception of oversight in sedans like the Impala and Malibu. Then there is the emphasis of satisifying psychologial needs rather than product quality in the Escalade and Hummer marketing - it generates more SUV hate. In the meantime, Toyota has both offered quality economy cars and let the public know they have them. Yes, Toyota makes trucks and SUVs too - they just don't market them like it's all they have to offer.

I hope the day comes when the Saturn sedan if offered with the Advanced Hybrid System 2 and see how it compares with the HSD and IMA.

The frustration with GM might be sort of like fans of high profile teams like Notre Dame, the New York Yankees, etc. when they have a bad season. You have people that earnestly want success, but are frustrated when it does not happen. When a sports team fails over several season, it's got to be the owners. GM and Ford have lost market share over the years - it's got to be managment (and labor).

 

The Motley Fool position makes sense. It would make more sense if they checked sales data before speculating, especially if the data supported their theory. Took me a while to find the right figures, but here are the April 2006 sales figures for the vehicles included in the promotion compared to the April 2005 sales figures for the same vehicles. 2005 had one more selling day, so all things being equal, you would expect the 2005 numbers to be about 4% higher than 2006 for each vehicle. Also keep in mind that in April 2005 most GM vehicles were heavily rebated. I should go back & check, but this might have been the start of the GM Discount for Everybody campaign. If so, most of these vehicles would've been discounted $3,000 or more.

Impala: April 2006 sold 25,879 April 2005 sold 23,442 That's an increase of 10.4%
Monte Carlo: April '06 sold 2,590 April '05 sold 3,123 decline of 17.07%
Grand Prix: April '06 sold 10,987 April '05 sold 7,825 increase of 40.41%
Lucerne: April '06 6,998 April '05 LeSabre sold 6,085 increase 15.00%
LaCrosse: April 06 sold 5,759 April '05 sold 8,612 decrease 33.13%

In total in April '06 we sold 52,213 of these cars, compared to 49,087 in 2005. That's an overall increase of 6.37% year to year with no rebate load and with one less selling day. As for the SUVs, Tahoe sales are up 35% in April '06 as compared to April '05. Yukon is up 36%. Escalade (which is not included in the promotion) is up 127%! I almost hesitate to tell you this, but Hummer sales are up 210% year to year and has posted year to year increases for 12 consecutive months. Don't freak out, though. Almost all of it is H3, not H2. H2 is pretty much flat as far as sales go.

Get's back to Chilly's question.....If sales are going so well, why offer such a discount program? The fact that it's only two states indicates that there are specific reasons for going into each of the two states. California is obvious. Gas prices are higher there than just about anywhere and we'd like to neutralize the concern over gas price, and / or provide the person who still decides to replace their SUV with a competitive GM sedan. Florida is the one that puzzles me, but I think I've figured it out. There is one other factor to be taken into account. Something that is not talked about a lot is that GM has been working to reduce fleet and rental car sales. The numbers I gave you are retail sales. Historically, fleet and rental cars have been sold at large discount and don't add much to the bottom line. By reducing to only maintaining profitable fleet / rental contracts the bottom line is improved, but overall volume drops. What state is the rental car capital of the world? Florida. What types of GM cars do the rental fleets typically offer? Mid-sized sedans. In my opinion, the promotion in Florida is looking to replace rental car volume with more profitable retail volume.

Long post, but hopefully semi-informative.

Peace,

Martin