Domestic manufacturers have long operated under a different model, placing sticker prices on their cars that are close to foreign competitors but designing the car so its cheaper to produce. This makes dealers happy because the margins are larger and customers happy because they are often offered ‘cash back’ or are able to negotiate thosands off the sticker price.
Anyone in sales can tell you that convincing the customer they ‘got a good deal’ is more important than anything else, so this formula has worked for the company so far despite the fact that it devalues the car from a resale standpoint (the more heavily a car is discounted at the dealership the more it tends to cost an owner over its service life).
Automotive News reports GM is adjusting its pricing to become less reliant on incentives. The Cobalt’s sticker is slashed by $1,500 for example…
As promising as that may sound, the V.P. of North American Vehicle Sales, Service and Marketing was quoted as saying incentives are “...part of what makes this business fun.” He obviously hasn’t had to buy a car and spend time haggling with a salesperson at one of his dealerships in a number of years…