GM expected to expand 'value pricing' in 1994

July 13, 1993|By Newsday

General Motors is expected to announce plans today to expand its "value pricing" concept for the 1994 model year, under which it offers certain highly equipped cars for discounted prices without rebates.

The program is an effort to win back market share lost to other U.S. and foreign-based automakers since the 1980s, partly because many GM models were allowed to age and are no longer competitive without steep price-cutting.

The concept was tried on a limited basis this year on all Oldsmobile cars, two Buick models, the Chevrolet Cavalier and one Chevrolet model each in Ohio and Florida. Ford also has used the concept on Thunderbirds and Escorts.

For '94, as in '93, the GM program will be focused on slow-selling vehicles, according to local dealers who have been briefed on it.

Each selling division except Saturn will have value-priced models, they said, and vehicles will include versions of Oldsmobile's two trucks, the Pontiac Grand Prix and the Chevrolet Caprice, Corsica and Beretta.

The new program helps make GM's aging cars more attractive by making them cheaper than the competition and luring buyers who had been priced out of the new-car market, says Art Spinella, auto research director at CNW Marketing/Research in Banndon, Ore.

"An outdated new car designed six years ago is better than the 12-year-old one you've got in the driveway," he said.

Theoretically, analysts say, the value pricing concept can benefit everyone. Manufacturer's costs are reduced by building a large number of cars equipped exactly the same way.

Dealer profits are lower per car but can be made up with larger volumes. For customers, the savings should at least equal those realized through rebates, with less confusion about rebate expiration dates and other restrictions.

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