GM Incentive Plan Ignites Price War

Washington DC November 15, 2005; The AIADA newsletter reported that General Motors’ new “red tag” sale has other automakers planning their counteroffensives, reports The Detroit News. Chrysler spokesman Jason Vines said they will announce a new incentive program on Thursday, and that GM’s move to another incentive program is “frustrating and undermines Chrysler’s effort to shift to a more value-oriented pricing strategy.”

Ford has said they will study GM’s latest incentive program and will make a decision this week on how they will respond.

GM spokeswoman Deborah Silverman said the red tag program reflects the company’s commitment to sell the "value of the vehicle rather than the deal."

The Detroit 3 would like to move to the model Toyota and Asian automakers have established, with attractive sticker prices and lower discounts, but declining sales have made it difficult. Toyota was first to launch aggressive year-end discounts in the 1980s as a response to strict import restrictions. The Detroit 3 didn’t really embrace such deals until the 1990s.