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Old March 20th, 2006, 04:34 AM   #1
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wow, ok thats one way to keep prices high GM..

http://www.autonews.com/apps/pbcs.dl.../1003&refsect=

Chevy's plan: More from less
GM puts a lid on Impala output to boost pricing


Price bump
GM wants to protect the transaction price for the Chevrolet Impala, which is riding high with the launch of the new version.
Feb. 06 $22,082
Feb. 05 $20,387
Feb. 04 $20,006
Feb. 03 $20,245
Source: Power Information Network

DETROIT -- How do you make more profit while selling fewer vehicles? By controlling inventory and squeezing more revenue out of each transaction.

General Motors is capping production of the Chevrolet Impala sedan at 250,000 units for sale in the United States and Canada this year, a knowledgeable source says. That means GM is sacrificing about 60,000 sales of its best-selling car. GM also will emphasize higher trim levels to increase transaction prices.

The automaker is trading unit volume for what it expects will be higher transaction prices, lower incentives and higher residual values. One key goal: Cut fleet sales of the Impala, which hit 50 percent of total Impala sales last year.

GM also will cut costs by cutting the third shift at the Oshawa, Ontario, plant where the Impala is assembled.

GM is adjusting production on other good sellers to manage inventory and extract more revenue out of each transaction. The source says GM will hold production of the Chevrolet HHR at 120,000 units rather than add capacity to build more of the popular sport wagon.

By contrast, GM is increasing production of higher-priced versions of the so-far-successful new Tahoe large SUV.

Sale prices rise

GM's is seeing higher transaction prices for the new Impala, which came out last fall, and the new Tahoe.

According to J.D. Power and Associates' Power Information Network, the 2006 Impala's average transaction price last month was $22,082, compared with the 2005 model's average transaction of $20,387 a year earlier. (See box.) The base Impala starts at $20,990, including shipping. The top Impala model starts at $26,990.

The 2007 Tahoe's average transaction price in February was $41,233, compared with the 2006 model's average transaction price last February of $34,546, according to the PIN data.

The 2007 Tahoe's average turn rate is 13 days, compared with 94 days for the 2006 model. The top-line model Tahoe has a sticker price at $38,990, including shipping.

U.S. Tahoe sales for the first two months of 2006 were 28,524, up 49.8 percent from the year-ago period, according to the Automotive News Data Center.

Chevrolet General Manager Ed Peper says demand is strong for the high-trim versions of the Tahoe, prompting GM to build more 3LT and LTZ models.

Chevrolet executives monitor dealers' orders daily and make production adjustments, Peper says. One surprise, he says, has been sales of the high-trim Impala SS models with V-8 engines, which the old model didn't have.

In 2004 GM built 296,594 Impala sedans, and last year built 258,524 as it phased out the old version and ramped up to build the new one. GM sold 311,135 Impalas in the United States and Canada in 2004, the last full year of production of the old model.

GM could easily sell 300,000 Impalas this year, the source estimates. But GM is set to cut a third shift sometime this year at the Oshawa plant. GM added the shift in June 2002.

GM would have to keep that shift if it were to build the maximum capacity, the source says.

Peper would not comment on the shift. But he says GM wants to limit fleet sales and increase retail sales to bolster residual values.

50% fleet

Last year, fleet sales were slightly more than 50 percent of Impala sales, says a source familiar with the data who asked to not be identified. Those data include 2005 and 2006 models. Fleet sales of a key competitor, the Toyota Camry, were less than 10 percent of overall 2005 sales, the source said.

According to figures from Automotive Lease Guide in Santa Barbara, Calif., the 36-month residual on the 2006 base Impala LS is 42 percent. That jumps to 44 percent on the LT model with the 3.8-liter V-6 and 45 percent on the high-trim SS model.

The 36-month residual on the base Camry is 49 percent, and it's 51 percent on the top-line Camry XLE V-6, according to Automotive Lease Guide.

At the end of last year, Chevrolet increased production of the HHR and will boost it again this year, Peper says. He declined to give a specific number. But a knowledgeable source says that after "several capacity adjustments," GM plans to build about 120,000 HHRs this model year.

"That's max without building additional capacity," the source adds.

Chevrolet launched the HHR last June and sold 41,011 of the sport wagons in 2005. During the first two months of this year Chevrolet sold 16,610, according to the Automotive News Data Center.

Managing Tahoe production is complicated by the fact that it is part of a group of full-sized SUVs coming out of the Janesville, Wis.; Arlington, Texas; and Silao, Mexico, assembly plants. That means that any changes to Tahoe production must take into account the coming launches of the Chevrolet Suburban SUV, due in late April, and the Avalanche pickup, due this summer.

Other full-sized SUVs built in those plants are the GMC Yukon and Yukon XL and the Cadillac Escalade, Escalade EXT and Escalade ESV.

In 2005, according to the Automotive News Data Center, GM built 495,201 trucks at all three plants combined, on two shifts.
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Old March 20th, 2006, 06:12 AM   #2
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Limiting capacity or production to keep trasnaction prices higher is something Honda has done for years, particularly with the Odyssey minivan.
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Old March 20th, 2006, 07:16 AM   #3
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Quote:
Originally Posted by SteVTEC
Limiting capacity or production to keep trasnaction prices higher is something Honda has done for years, particularly with the Odyssey minivan.
exactly what my friend wrote in another forum.

Quote:
Originally Posted by p-rex
simple supply and demand. Its why Honda has been successful, and why people still pay over MSRP for a minivan from them.
Offer a quality product (and yes, I said quality in relation to GM) and dont satuarate the market. People will ant it, and will pay what they should for it.

good job GM, finally learning economics 101!
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Old March 20th, 2006, 07:51 AM   #4
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Quote:
Originally Posted by OwAce
The 2007 Tahoe's average transaction price in February was $41,233, compared with the 2006 model's average transaction price last February of $34,546, according to the PIN data.

The 2007 Tahoe's average turn rate is 13 days, compared with 94 days for the 2006 model. The top-line model Tahoe has a sticker price at $38,990, including shipping.
Wow, that's incredible!
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Old March 20th, 2006, 08:13 AM   #5
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Quote:
Originally Posted by kramer2k
Wow, that's incredible!
go check one out, you may want to trade in the murano real quick.
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Old March 20th, 2006, 08:26 AM   #6
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Quote:
Originally Posted by OwAce
go check one out, you may want to trade in the murano real quick.
Are they nice? I like the exterior styiling from what I've seen. Chevy always does well with the Tahoe IMO.
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Old March 20th, 2006, 08:34 AM   #7
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Quote:
Originally Posted by kramer2k
Are they nice? I like the exterior styiling from what I've seen. Chevy always does well with the Tahoe IMO.
if you think the exterior is nice, wait till you see the interior. thats the huge revision GM did with its T900 platform.

mileage is slightly improved due to more fuel efficient engines, but that is significantly offset by the roughly 600lbs in weight increase on the truck.
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Old March 20th, 2006, 08:42 AM   #8
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the new GMT900 SUVs are da bomb. Nobody will be complaining about chintzy interiors in these things, and if they do they're either complete snobs or biased.
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Old March 20th, 2006, 09:09 AM   #9
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Quote:
Originally Posted by SteVTEC
the new GMT900 SUVs are da bomb. Nobody will be complaining about chintzy interiors in these things, and if they do they're either complete snobs or biased.
That wouldn't be the platform that the new Denali is based off of is it? Because the new Denali is freaking amazing!! GMC had a press release function where I work and they were showcasing the new Denali's. They had cutaways of the transmission, engine (beautiful), and suspension. I sat in one and Steve's right, it won't let down.
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Old March 20th, 2006, 08:35 PM   #10
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I guess it's a good idea to do this with the new Impala since it makes the old one look like complete crap . Will they be doing this to the Buick Lucerne as well? I would guess not since you can get a CXS model (4.6L DOHC Northstar V8) for the very competitive price of $34,900.

Quote:
Originally Posted by OwAce
if you think the exterior is nice, wait till you see the interior. thats the huge revision GM did with its T900 platform.
I just saw the new GM SUV's at an auto show last week and was shocked by how much better the interiors were over the older models .



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Old April 3rd, 2006, 09:41 AM   #11
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GM's problem has never been that theirs aren't good, its been that crack heads have been running the company into the hole with dumb business moves.
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Old April 3rd, 2006, 09:52 AM   #12
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Quote:
Originally Posted by OwAce
The 2007 Tahoe's average turn rate is 13 days, compared with 94 days for the 2006 model. The top-line model Tahoe has a sticker price at $38,990, including shipping.
Uh, sticker on the LTZ 1LZ is higher than that, and I just configured one with all the options I would want and busted the $50k mark
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Old April 3rd, 2006, 09:58 AM   #13
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Quote:
Originally Posted by VTEC-v6!
Uh, sticker on the LTZ 1LZ is higher than that, and I just configured one with all the options I would want and busted the $50k mark
to GM
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Old April 14th, 2006, 01:29 AM   #14
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Quote:
Originally Posted by VTEC-v6!
Uh, sticker on the LTZ 1LZ is higher than that, and I just configured one with all the options I would want and busted the $50k mark
$50,000 for a Tahoe, WTH!



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