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GM extends its employee discount offer

General Motors Corp. said Wednesday it is extending its employee-pricing discount through the end of the month, saying the program’s two-week run has been highly successful.
/ Source: msnbc.com news services

General Motors Corp. said Wednesday it is extending its employee-pricing discount through the end of the month, saying the program’s two-week run has been highly successful.

GM said it will continue offering employee discounts through Sept. 30 to all customers on all 2008 GM vehicles in stock except medium-duty trucks, and it is extending the number of 2009 models included in the sale. The incentive program was previously set to end Tuesday.

“It is a result of the success of the program through August, and we’ve added some of the 09 (models) because some of the 08s are in really short supply on the dealer lots,” GM spokesman John McDonald said.

Employee discounts generally knock about 10 percent off the invoice price of a vehicle, though it varies by model.

The discount now include 2009 Silverado pickups, certain Saturn models, more Cadillac models, and Hummer H2 and H3 sport utility vehicles, among others. Previously, only a handful of 2009 Cadillac, Pontiac and Chevrolet vehicles were covered by the incentive program.

The incentive also covers hybrid models of those vehicles, GM said.

It comes as GM and other automakers are facing a sharp decline in sales as amid a weak economy, high fuel prices and an unprecedented drop in demand for large vehicles.

“The reason they’re doing (this) quite simply is people aren’t buying cars,” said Aaron Bragman, research analyst at the consulting firm Global Insight in Detroit. “With the economy situation what it is, and with rising costs from everything from food to fuel, the amount of disposal income for car purchases has simply evaporated.”

Although GM has offered limited employee-pricing programs recently, this marks the first time the automaker has offered the discount to all buyers since 2005.

The sale was wildly successful then, boosting GM’s June U.S. sales 41 percent, its July sales 19 percent and prompting both Ford Motor Co. and what was then DaimlerChrysler AG’s Chrysler Group to unveil their own employee-pricing plans.

Separately, GM said it expects to sell its Hummer brand by the end of this year or early in 2009, as it shores up capital to survive a deep industry slump amid record losses, its chief operating officer said.

GM, which has lost $51 billion over the past three years, plans to free up $15 billion in liquidity with cost-cutting, asset sales and new borrowing under a July plan intended to reassure investors that it can ride out of the down turn.

“We are trying to approach this (Hummer sale) on an urgent basis,” he said. “End of this year is a fair amount of time. It can conceivably happen ... but if it takes us to early next year, that is okay, too,” Fritz Henderson told reporters.

“We are working quickly. It will be premature to mention something,” Henderson said on Wednesday, adding that “several” suitors had approached GM. But he declined to name any.

At the launch of a new model in the Indian capital he added he expected the U.S. auto industry to face challenges for some time and sees vehicle sales there falling to 14 million vehicles in 2008 from 16 million last year.

GM was not just looking at selling brands but also other businesses, but Hummer would be among the first, he said.

The gas-guzzling Hummer has hurt GM’s image at a time when consumers demand more fuel efficiency as high oil prices hurt. Hummer’s U.S. sales fell 40 percent in the first half of the year.

GM is realigning its North American production to reflect a U.S. auto market reeling from an oil shock being compared to those of the 1970s. It plans to close four truck plants but add shifts at two others that build popular higher mileage cars.

Henderson expects softer sales in the United States in 2008 as oil prices and the credit crisis deter customers.

“It is going to stay challenging for some time,” he said. ”Have we found the bottom? I don’t know.”

On Tuesday he said the top priority was to turn round the North American business and continue investments in emerging markets such as India and China.

He inaugurated the car maker’s second plant in India on Tuesday and GM hopes to control a 10th of the Indian market by 2010, when passenger vehicle sales are expected to hit more than 2 million vehicles.

When asked how soon he expected emerging markets to offset the slump in U.S. he said: “It is not about either/or, it is about both.”