GM auto dealerships offer buy-one-get-one-free deal
By Bernard Simon in Toronto
October 20 2004
Financial Times

If “buy one, get one free” can move pizza, shoes and videos, why not cars? In a sign of the North American motor industry's desperation to reduce bloated inventories, some General Motors dealers in Kansas City have been offering a free Chevrolet Aveo sub-compact to anyone buying a 2004 Trailblazer, Tahoe or Suburban sport utility vehicle, priced at about $30,000.


“It was very successful,” said Jeff Rigg, general sales manager at Van Chevrolet-Cadillac, which gave away 26 Aveos in September. According to Mr Rigg, demand was so strong that his dealership exhausted its stocks and bought in 11 Tahoes from a competitor.

Carmakers, especially GM and Ford, have been offering unusually generous incentives, including hefty discounts and zero per cent financing for up to six years.

According to CNW Marketing Research, incentives broke through $6,000 a vehicle for the first time in September. John Casesa, analyst at Merrill Lynch, estimates that incentives jumped by an average of 7.1 per cent in the year to September to $3,125. CNW forecasts that 28 per cent of American car buyers will take advantage of discounts, rebates and cut-throat financing this year, only fractionally less than those who buy a car “because it's a new, sexier, better model”.

Not everyone thinks that “bogo”, as one well-known chain of shoe stores describes it, makes sense for cars.

Bernard Swiecki, an analyst at the Centre for Automotive Research, said the last time he was aware of the tactic being used was in the mid-1980s to clear stocks of the much-maligned Yugo car. Some Yugo distributors were tied to GM dealerships, which ended up giving away a car to anyone who bought a Buick.

A giveaway may generate volume, said Mr Swiecki, but it could end up hurting a brand's image.

Broome Chevrolet-Oldsmobile, another Kansas City dealership, decided not to follow its rivals. Don Glenn, sales manager, described the promotion as nothing more than “a great gimmick”.

The “bogo” offer requires buyers to pay full price for the SUV, with no trade-in privileges. Mr Glenn listed incentives and mark-ups that added up to almost $12,000, the price of the Aveo, which is based on a South Korean Daewoo model and is one of the smallest and cheapest cars in the US.

Mr Rigg, at Van Chevrolet-Cadillac, said that more than half of those people drawn to the dealership by the offer ended up trading in their existing vehicle and leaving with just one new car.

 

man, that's one ugly ass car!

I'm inclined to agree though; deals like that will only hurt the company's reputation even more(if that's even possible!)

one thing we can take from this though, is GM officially admits the avea was a hugh failure.

 

Yeah I'm not a huge fan of any of the Daewoo's GM rebadged as Chevy's. The Optra is alright, with lots of standard features, but with the exception of the 5 it never really caught on. The same is true of the Epica.. and man did GM ever throw some rebates at that thing!