General Motors Corp. and Ford Motor Co. said Monday that they would roll back sticker prices as much as 16% on some 2006 models in a bid to wean consumers from the heavy discounts that spurred record car and truck sales this summer.
GM and Ford hope to cut the need for sales incentives by getting closer to the actual prices at which dealers sell their vehicles.
As expected, GM also Monday ended its 2-month-old "employee discount" plan for the public while Ford extended its discount plan until Sept. 6.
A spokesman for Chrysler said Monday that the company would announce the continuation of its employee discount plan today, but was not changing its 2006 pricing.
U.S. carmakers have long been criticized for offering a bewildering array of discounts, rebates and other incentives to lure buyers.
In June, GM launched its employee discount plan, selling most models at the same price that GM employees pay. The discounts reduced the average price about $500, though some vehicle prices fell $10,000 when other incentives were included. GM's sales rose 47% in June.
In July Ford and Chrysler offered their own discount campaigns.
Those programs helped domestic automakers trim inventories and score huge sales gains. GM said it sold close to 1.1 million vehicles in June and July, and Ford and Chrysler are expected to post record July sales when figures are released today.
Japanese automakers have been less dependent on incentives than their U.S. counterparts and none have offered an employee discount plan. Indeed, Toyota Motor Corp. has raised U.S. prices an average of 1.2% for its 2006 Toyota, Lexus and Scion brand models.
This summer's employee discount plans gave GM, Ford and Chrysler "a short-term boost," said Robert Barry, an analyst with Goldman, Sachs & Co. Without those discounts, "the Asian [automakers] will go back to gaining market share," he said.
The sticker price changes, which have taken effect on early '06 models, are expected to foreshadow a sales slowdown after the summer's blistering pace.
"Anytime you pay a lower price it's good for consumers," said Wes Brown, an auto industry analyst with Iceology, a Los Angeles market research firm. "But the restructuring of base pricing won't have near the level of impact for domestic manufacturers that the employee discounts had."
The discounts also have pulled many buyers into the market sooner than they otherwise might have committed to a new car, and this could cause the sales pace to drop later this year and next year, analysts say.
