Some General Motors Corp. dealers are extending hours to handle the traffic. Chrysler's new pitchman Lee Iacocca is prompting consumers to inundate its call centers. And Ford Motor Co.'s newest models are moving off lots at a faster clip.

Detroit's latest marketing gambit -- employee discount prices for all -- is proving to be more than a one-month wonder, drawing heavy showroom traffic so far in July after propelling GM to a record June, according to dealers and analysts.

While there's no shortage of concern that today's sales party will mean tomorrow's hangover, dealers are elated that customers continue to snap up end-of-model-year cars and trucks that otherwise might have gathered dust.

Some Big Three dealers are reporting July sales are up as much as 50 percent from a year ago.

Overall, U.S. auto sales are on pace to reach 1.65 million vehicles in July, a 6 percent increase from a year ago, said Art Spinella, an analyst with Bandon, Ore.-based CNW Marketing Research.

"These are deals you just can't pass up," he said.

To handle the rush, Liberty Chevrolet in New Hudson is extending hours, opening on Saturdays and cranking out paperwork.

Booming thunderstorms and sheets of rain Saturday weren't enough to discourage Gary and Suzanne Wick from stopping at Liberty Chevrolet to take advantage of the employee discount sale.

The Novi couple didn't immediately need the 2005 Chevrolet TrailBlazer they drove home, but they couldn't resist the deal that saved them $5,000. "It definitely sparked our interest," said Gary Wick, 32.

Neither could Bill and Dorothy Wilkins, a retired couple from New Hudson, pass up $2,000 in savings on a 2005 Chevrolet Malibu sedan.

"It pushed us over the edge," Dorothy Wilkins said.

GM, struggling with lackluster sales, bloated inventories, and North American automotive losses, jump-started industry sales in June when it introduced employee pricing on new cars and trucks for all consumers.

The result was a 47 percent spike in June sales. Total industry sales jumped 16 percent, and are now up 1.9 percent this year after a weak start.

Ford and DaimlerChrysler AG's Chrysler Group -- which initially scoffed at GM's offer -- essentially matched the deal in early July.

Chrysler even lured back Iacocca to appear in television commercials to hawk its new discounts.

"We are just absolutely slammed," said Jerry Reynolds, who owns Ford dealerships in Garland, Texas, and Edmond, Okla. "As of Wednesday we were up about 35 percent with a ton of deals pending."

Tawny Arnaud, vice president at Galpin Ford, the world's largest Ford dealer, in North Hills, Calif., has seen floor traffic boom.

"We're probably up ... maybe 45 to 50 percent over last year," Arnaud said.

For some GM dealers, showroom traffic has slowed since June because of dwindling stockpiles.

Liberty Chevrolet salesman Marv Chomer, who sold a record 20 vehicles in June, likens the dip to the run of a blockbuster movie, such as the final "Star Wars" installment.

"The first week it's a huge hit," Chomer said. "The second week it may not do as much business, but it's still a huge hit."

He sold six vehicles through the first two weeks of the month, but says he has several deals pending.

Sales manager Mark Pawelski expects business to pick up this week after the dealership extended weekday hours by one hour and opened on Saturday.

"I'm very optimistic," he said.

Steve Cook, owner of the GM Superstore in Vassar, says the dealership is ahead of last July's sales pace.

GM figures, he said, show the automaker's U.S. dealers have seen sales during the first 12 days of the month jump to 130,000 vehicles, up from 104,000 last year.

Ford spokesman David Reuter said it's too early to offer a specific sales forecast, but added, "We're seeing strength in all areas, but it's particularly strong for new products."

CNW research shows, however, the pace of July sales is more robust in some regions.

"It's strong in Los Angeles, where dealers are putting a lot of effort into it, and in Chicago," Spinella said. "But some other regions like Texas are tapering off because of its high concentration of military people who are away."

Chrysler's decision to tap Iacocca has triggered a wave of calls from potential customers and is beginning to draw shoppers. "Overall, we feel the advertising has certainly cut through," Chrysler spokeswoman Lori McTavish said.

Earl Hesterberg, president and CEO of Houston-based Group 1 Automotive, which owns 96 dealerships in the United States, has yet to see the effects of the Iacocca commercials at its Chrysler stores.

"The Chrysler thing hasn't picked up much for us," Hesterberg said. "They seemed to start the advertising a little later. But the Ford thing -- they have really been cranking."

At River Oaks Chrysler Jeep in suburban Houston, owner Alan Helfman said he's sold about 70 cars this month, topping the first two weeks of last July. But hot product is driving sales more than employee discounts or Iacocca.

"It's all the 300," Helfman said, referring to the popular Chrysler 300 sedan. "But it's still a good deal and it's getting people moving like crazy."

The torrid summer sales pace, however, has some dealers and industry analysts worrying the employee discount deals are merely stealing sales from later in the year.

But marketing analyst Jim Sanfilippo, with Bloomfield Hills consultants AMCI Inc., believes those worries may be unfounded.

"The pull-ahead may be overstated with the robust economy and consumer sentiment high," Sanfilippo said. "When there are lower prices, it significantly pulls in people from the used car ranks."

Even if future sales have been pulled ahead, it's of no concern to Group 1 Automotive's Hesterberg, who said: "There's always pull-ahead when you have a good price-related promotion. But, frankly, all of us ... needed to move this inventory out."

The big question now: What will automakers offer when the employee discount programs expire on Aug. 1?

GM plans to lower prices on 2006 models, but other automakers have not tipped their hands.

Sanfilippo said foreign car companies, especially Japanese and Korean companies, who have been less aggressive with incentives, are watching the sales frenzy enjoyed by Detroit's automakers closely.

"When GM can get a 30 percent share, that's not something they're going to ignore," he said.

http://www.detnews.com/2005/autosins...A01-251332.htm

 

All the hooplah over the employee pricing for everyone is actually more perception than anything. I went to my local Pontiac dealer to really check this out - a 2005 Grand Prix GT with an MSRP of $25,600 has an employee price of $20,600.

When my step dad bought his 2003 Grand Prix GT, no special offers or gimics were on hand (forget financing, as he paid cash for the car). Mind you, this was still before the '04 redesigned GP's came out.....

The sticker was $26,350. He bartered between 3 dealers and got the sales price down to $21,000 even.... and then on top of that he added his GM card savings. So he essentially got the same deal by doing a little homework and hard work.

If people saw that the employee pricing this was just basically the price you could get the car for anyway with just a little work, it all of a sudden doesn't sound so fantastic.

My step dad himself said he doesn't see what so great about the pricing thing.

 

You'd be surprised how many people really have no idea how much they should pay for a car. Even some so-called "educated" car buyers can get bumped up by a halfway decent sales person.

 

Near the end of the car year (sept, otc and november) one can get a, say, a typical 30k car for 2/3 (20k or a bit more) of the pricing from the big 2 (or two and a half). According to some people who actually compared, you save about 500 bucks total with the current "employee discount" compared to the pricing they can get WITHOUT this whole employee discount.

That's why I laugh so hard everytime I see the pricing on a Detroit car. They are just hallucinating, then there are those who are clueless and pay sticker.

 

Ford Motor Co. on Tuesday reported a 19 percent drop in second-quarter profit as it continued to lose U.S. market share, and said its automotive operations will not be profitable this year.

Sigh.

 

once they drop this firesale discounting their sales will drop into the crapper as this is taking customers who wanted to wait a couple months before reloading their gm driveway

 

You bet. Japan is just sitting back and laughing right now..... as the updated Accord will be released right when GM halts the employee price carnival.

Impeccable timming, Honda

 

For well informed buyers, this employee pricing is +/-300 from what people usually get the car for. I am willing to bet that some people even got below this "employee pricing".

The force that's driving this wave of spontaneous buyers is the fact that everybody is getting the same deal. Nobody walking out of the stealership is going to feel that he/she got ripped off.

Wait till they realize what crappy car American companies built and the resale value. A big hello for used car market in the next 3 years.

Nissan, on the other hand, has some more lucartive employee/business associate pricing (check out insidenissan.com). I think if the foreign (Asia/European) automobile companies really want a price war, the American companies would've been out of business a long time ago.

 

Nah, of all people, imports are the last one that can afford a price war. Luckily with their quality and relibility they don't have to.

A price war can easily be the end of the import cars in the usa. it hurts their stock tremendously, their resale value goes down the tubes, percevied value, etc, would be messed up.

At the end of the day, Detroit boys will somehow stay alive because this is their home court (whine, beg, accuse imports of wrong doings), but you can't say the same for imports if they drawn out a month old discount war against each other.

Even with all the discount, the detroit companies can still cover their losts somewhat (either selling the cars cheap, or sell them to fleets cheaper).

 

From my experience selling cars, I'd say at least half the people who buy a car end up paying more for it than they "have" to. Plenty of supposedly informed buyers still ended up buying a car from me where I had a lot of money left on the table.