GM extends employee discounts through September

By DAN STRUMPF, AP Business Writer

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By Beth Boehne

Story Created: Sep 4, 2008 at 9:49 PM EST

Story Updated: Sep 4, 2008 at 9:49 PM EST

NEW YORK (AP) — General Motors Corp. said Wednesday it is extending its employee-pricing discount through the end of the month, saying the program's two-week run has been highly successful.

GM said it will continue offering employee discounts through Sept. 30 to all customers on all 2008 GM vehicles in stock except medium-duty trucks, and it is expanding the number of 2009 models included in the sale. The incentive program was previously set to end Tuesday.

"It is a result of the success of the program through August, and we've added some of the 09 (models) because some of the 08s are in really short supply on the dealer lots," GM spokesman John McDonald said.

Employee discounts generally knock about 10 percent off the invoice price of a vehicle, though it varies by model.

The discount now includes 2009 Silverado pickups, certain Saturn models, more Cadillac models, and Hummer H2 and H3 sport utility vehicles, among others. Previously, only a handful of 2009 Cadillac, Pontiac and Chevrolet vehicles were covered by the incentive program.

The incentive also covers hybrid models of those vehicles, GM said.

It comes as GM and other automakers are facing a sharp decline in sales as amid a weak economy, high fuel prices and an unprecedented drop in demand for large vehicles.

"The reason they're doing (this) quite simply is people aren't buying cars," said Aaron Bragman, research analyst at the consulting firm Global Insight in Detroit. "With the economy situation what it is, and with rising costs from everything from food to fuel, the amount of disposal income for car purchases has simply evaporated."

GM's U.S. sales are down 18 percent through August this year, the automaker reported Wednesday. In August alone, GM said its year-over-year U.S. sales dropped 23 percent, led by a steep decline in light truck sales.

However, the automaker said August sales rose 30 percent compared with July, which it attributed to the incentive program.

Although GM has offered limited employee-pricing programs recently, this marks the first time the automaker has offered the discount to all buyers since 2005.

The sale was wildly successful then, boosting GM's June U.S. sales 41 percent, its July sales 19 percent and prompting both Ford Motor Co. and what was then DaimlerChrysler AG's Chrysler Group to unveil their own employee-pricing plans.

Both Ford and Chrysler said Wednesday that they are have no plans to offer their own employee-pricing plans this time around. Ford spokesman Mark Schirmer said the company had no plans for such an offer, while Chrysler LLC spokesman Stuart Shorr said the company is focusing on other incentive programs to drive sales.

Shares of GM rose 62 cents, or 5.8 percent, to close at $11.27 Wednesday, while Ford shares added 6 cents to end at $4.57. Chrysler, which was bought by private-equity firm Cerberus Capital Management LP last year, is not publicly traded.

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