updated 10/5/2005 7:34:21 AM ET 2005-10-05T11:34:21

As their popular employee-pricing discounts end, U.S. automakers are shifting to sales strategies that emphasize the value of their vehicles rather than big cash incentives. But some analysts wonder if the companies will be able to stick with the new approach.

“It’s going to take some time. Rebates have been with us since 1974 in a very big way, and unfortunately they have attached themselves to the domestics more than the import brands,” said Jim Sanfilippo, a senior industry analyst with Bloomfield Hills-based Automotive Marketing Consultants Inc.

General Motors Corp. was the first of the Big Three to let customers pay the employee price for vehicles in June. Ford Motor Co. and DaimlerChrysler AG’s Chrysler Group followed in July. GM ended its program Friday, and Ford and Chrysler ended theirs Monday.

Sanfilippo said employee pricing appealed to buyers because it was easier to understand than the pile of incentives automakers and dealers had been offering.

“There was a no-haggle aspect to this that was incredibly potent,” he said.

Now, automakers are drifting back into their old habits but trying to be smarter about pricing and incentives.

Ford announced Tuesday it will offer rebates on 2006 vehicles, from $500 on the new Ford Fusion sedan to $3,000 on the Ford Expedition. It’s also offering cash incentives or zero-percent financing on some 2005 models, including some F-150 pickups.

Ford spokesman Jim Cain said the company is pricing vehicles closer to their actual value rather than piling on rebates.

For example, the 2006 Explorer sport utility vehicle is $1,700 less than the 2005 model, even though Ford improved the fuel economy and other features. Ford is offering a $2,000 rebate on the Explorer, but that’s far lower than the average incentive of $4,909 offered for the 2005 Explorer last September, according to Autodata Corp. Ford’s new program runs through Jan. 3.

GM is lowering the prices on 30 of its 76 models and adding features to other models to make them more competitive. The base price of the Chevrolet Malibu, for example, is $17,990, or $1,835 less than the 2005 model.

Paul Ballew, GM’s executive director of market and industry analysis, said GM’s goal is to price competitively, keep incentives simple and market the strength of products rather than deals. GM led the industry with a 14-percent decline in incentive spending in September, Merrill Lynch analyst John Casesa said Tuesday in a note to investors. The average incentive in September was $2,600 per vehicle; for Asian brands it was $1,000 less.

GM has no end date for its new strategy.

Chrysler also is emphasizing value. Through Oct. 31, Chrysler is running a promotion with the tag line, “Better Products. Newer Features. Right Price.” Chrysler said it will offer $1,500 to $5,000 cash back for most 2005 models and up to $3,500 cash back on some 2006 models, or zero percent financing for three years.

Sanfilippo said Mercedes-Benz and Hyundai Motor Co. successfully lowered prices and incentive spending in the mid-1990s, but it took them six to eight months for a successful transition. Sanfilippo said he’s not sure Ford and GM will want to wait that long, since they’re under so much pressure to reverse losses in North America.

“They’re set up to do this, but is the culture persuaded and do they have the discipline to be patient?” Sanfilippo said.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


Discussion comments


Most active discussions

  1. votes comments
  2. votes comments
  3. votes comments
  4. votes comments

Data: Latest rates in the US

Home equity rates View rates in your area
Home equity type Today +/- Chart
$30K HELOC FICO 3.79%
$30K home equity loan FICO 4.99%
$75K home equity loan FICO 4.69%
Credit card rates View more rates
Card type Today +/- Last Week
Low Interest Cards 13.83%
Cash Back Cards 17.80%
Rewards Cards 17.18%
Source: Bankrate.com