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With aggressive bargaining, savvy buyers may be able to negotiate deals based on $5000 factory-to-dealer incentive currently offered on the 2010 Chevrolet Cobalt. (General Motors)
With aggressive bargaining, savvy buyers may be able to negotiate deals based on $5000 factory-to-dealer incentive currently offered on the 2010 Chevrolet Cobalt. (General Motors)

Driving It Home

GM and the deal Add to ...

General Motors, as my colleague Greg Keenan so ably reported in the Globe and Mail this week, will stop using heavy incentive spending and fleet sales to chase market share.

That's the word from GM Canada president Kevin Williams. Well, GM's market share is 15.4 per cent now, down from 19.1 per cent a year ago. Apparently GM is shooting for 16 per cent or better in Canada. That's where Ford of Canada is now - and Ford is the No. 1 auto maker by sales.

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I want to talk about incentive spending, but before going there, let's give credit to GM for paying back about $8-billion (U.S.) in loans to Canadian, Ontario and U.S. taxpayers. Eight billion down and some $50-billion to go - including about $9-billion to Canadians. I was in favour of bailing out GM at the time, so let's salute progress.

Now let's talk about incentives and the limits of what GM will do to take market share. Williams told Keenan that GM Canada could probably push its share to 17 or 18 per cent this year, "but the kinds of things you have to do to get that done are not the kinds of things we're willing to do in the new General Motors."

So what are those things? Have a look at what GM has been offering in sales sweeteners.

Take the Chevrolet Silverado pickup. It has $10,000 in factory-to-dealer rebates which the savvy buyer might be able to combine with $6,500 worth of other GM Canada incentives. It's possible - not likely, but possible - to take a $40,000 GM pickup before taxes and squeeze the final price down to about $26,000, taxes and freight included. So what is GM not willing to do to sell Silverado pickups, exactly?

Or how about the $15,500 Chevrolet Cobalt compact sedan? It has a $5,000 factory-to-dealer incentive on it and the odd buyer might be able to combine that with a $1,500 Loyalty Bonus from GM, plus $500 more in the form of a Canadian Forces Bonus. That's $7,000 in the trunk of a $15,500 car - not including dealer discounts.

Anyone with any sense, anyone who understands the importance of GM to the overall economy of North America and parts of the rest of the world, wants GM to succeed. No doubt No. 1 Ford would like GM's success to have its limits, but there is no desire out there to see GM fail - other than among those with an axe to grind, or the purely ill-informed.

But GM's current incentives underscore the size and scope of the job ahead. Kevin Williams says there are limits to what the company will do to reclaim market share. Those limits, for now, really are quite far out there.

 

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