General Motors Looks to Keep Momentum With Discount Extension, More Models

[Dick Heller]

DETROIT (AP) -- General Motors Corp., looking to maintain the momentum of its hugely popular employee-pricing discount plan, has extended the promotion until Sept. 30.
The worlds largest automaker said Thursday the plan now includes select 2006 full-size trucks and sport utility vehicles, including Chevrolets Avalanche and Tahoe, the GMC Yukon and the Cadillac Escalade.

"Trucks make up more than 60 percent of our sales," said spokeswoman Brenda Rios. "We wanted to continue our high summer numbers."

GM was the first of Detroits Big Three automakers to offer employee prices for all consumers in June. Its sales shot up 41 percent that month and more than 19 percent in July. Ford Motor Co. and DaimlerChrysler AGs Chrysler Group followed with their own employee-pricing plans in July.

Ford, the second-biggest U.S.-based automaker, hasnt decided whether it will extend the discount plan past its Sept. 6 deadline, spokesman Jim Cain said Thursday, though he said the program has been "phenomenally successful." Fords U.S. sales rose more than 35 percent in July.

"Weve basically accomplished a sell-down of 2005 models," Cain said.

Whats more, clearing out this years inventory puts the company in good position to introduce its redesigned Ford Explorer SUV and new Ford Fusion mid-size sedan for 2006, Cain said.

"They wont be competing with large inventories from 2005," he said.

GM and Ford both extended the discount plans in August, and Chrysler extended the deal indefinitely. GMs incentives had been scheduled to run through Sept. 6.

Chrysler spokesman Kevin McCormick said Thursday the companys employee pricing remains in place indefinitely.

Despite the programs successes, some analysts have said the promotions likely generated a large number of "pull-ahead" sales that could hurt business this fall.

Already, Merrill Lynch analyst John Casesa said he expects GMs sales to decline about 10 percent in August because the discount program has depleted much of GMs 2005 inventory.

"GM likely doesnt have enough inventory to maintain a strong sales pace," Casesa said in a research note this week.

Casesa predicts Fords sales will climb about 5 percent for August, and Chrysler will see a slight increase. He also expects the top Japanese automakers all to report sales increases.

Major automakers are scheduled to release August results next Thursday.

The employee-pricing programs have helped the automakers achieve near-record sales. The industry reported a seasonally adjusted annual sales rate of 20.8 million units for July, the highest since a record 21.8 million rate in October 2001, according to research firm Autodata Corp.

Shares of GM fell 18 cents to close at $34.09 Thursday on the New York Stock Exchange. Ford shares fell 10 cents to close at $9.82, while Chrysler shares rose 12 cents to close at $52.05, also on the NYSE.