Will GM's New Buyer Incentives Help Sales?
As General Motors tries to pull an emergency U-turn, the new man in the driver's seat, CEO Fritz Henderson, admitted Tuesday that the company is facing a crisis with consumers.
"It's about confidence. It's about credit. And it's about employment," Henderson said.
So GM unveiled a new package of buyer incentives, reports CBS News correspondent Anthony Mason. The automaker, like Ford and Hyundai, will now offer to make car payments for buyers who are laid off from their jobs. GM also promises to guarantee the trade-in value of its vehicles, when buyers purchase another GM car or truck.
"Certainly our view is we need to bring customers back into the equation," Henderson said.
Because across the industry, sales have been in freefall. In 2005, nearly 17 million vehicles were sold in the United States. This year the industry's on course to sell just 9 million. Can it survive at this rate?
"Survive, maybe. Prosper, no," said industry analyst Brian Johnson.
Johnson said the industry's old sales tricks, like zero percent financing and rebates simply aren't working anymore.
"They've really lost the ability to kind of wake up the consumer and say it's time to go in the showroom," Johnson said.
So President Barack Obama is promoting a new federal tax break.
"If you buy a car anytime this year, you may be able to deduct the cost of sales and excise taxes," he said.
Mr. Obama's backing a proposal that would give cash to buyers who trade in their old, gas-guzzling clunkers for new fuel-efficient cars. A similar program in Germany has boosted sales there by more than 20 percent.
"This would really help us out because we're really hurting," said a car dealer in Los Angeles.
GM wouldn't say what it's new incentives will cost the company. But even the most radical cost-cutting measures can't save GM if customers don't start buying cars again.
