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Car Employee Discounts Explained

AS
by Autobytel Staff
November 17, 2009
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You've all heard the General Motors ads, "You pay what we pay. Not a cent more," in one form or another. Not only has General Motors set the standard for this type of advertising but many other manufacturers and retailers have gone on to copy them. All of which are of great benefit to the consumer. What this ad is saying, is that the same discounted rates that General Motors employees get, as one of their perks of the job is now available to the consumer. Now we all now that rebates, incentives and sales of one kind or another have been going on for decades. This 'employee discount' is relatively new, having appeared in 2005 with General Motors new advertising program. However, are these ads any kind of a real deal? These deals seem to be a good deal but are they? The problem with this type of pricing is that if you are a hard comparison shopper, you might very well have gotten the same price by doing your research first. It depends on your ability to garner the right knowledge and negotiate. If you are getting the car at cost, then you are in fact getting the car for the invoice cost minus the rebate the dealership gets from the manufacturer. This is called a holdback. Now if you knew this first, you could have negotiated the deal down to a similar level by getting comparison quotes from different dealerships over the Internet. The real difference (and benefit) with the employee discount program was the fact that you didn't have to do this type of work or worry about negotiating for the best price. Many people live to chew down a price but for the masses, they hate, hate and hate to haggle over prices. Some do it well, and some walk away knowing they left too much money on the table. This leaves a bad taste for them and they will delay their next purchase because of it. Getting the deal at invoice pricing minus holdback is still better than paying thousands more in the weeks prior or the weeks after the deal. Everyone loves a good deal. However, the cars these deals apply to are limited. If you don't get the vehicle that is perfect for your needs, wants and budget, then no matter how discounted it is, it still isn't a good deal. However, this idea of getting the car at cost did what it was meant to do – increase sales. There was a limited time attached to the offer and it was only later that everyone could see the 'deal' for what it was – a chance to move out older model vehicles to make way for the new models. The hope is that as the many new consumers start driving their new vehicles, then the vehicle will continue to sell itself. Were these deals a good idea for the companies involved? Not according to GM marketing director Mark LaNeve who spoke at an LA Auto show about it. According to him, this program helped the manufacturer to gain a lot of initial sales but probably hurt their long-term sales. He said that the program support the brand, as it made the automaker appear to only be able to sell vehicles with massive incentives instead of having a product that would sell itself with its quality. As they moved into 2006, General Motors tried to reduce the amount of incentives and emphasize the strong product qualities. However, the consumer hasn't jumped into the same trend and the company's new product message appears to have gotten lost. It's not apparent if this tactic worked as now some of the new and updated vehicles have now had the sticker prices reduced. The company continues to experience ongoing financial problems.


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