GM says "No unnatural acts"

[kostby]

Quote »DETROIT -- General Motors executives are determined not to become "desperate men" doing "desperate things" this summer to move metal.The automaker plans to hold to its strategy of lower sticker prices that are closer to the actual transaction prices. It will not rely on big summer blowout programs to boost market share and support sales, say GM's Robert Lutz and Mark LaNeve. Lutz is vice chairman and vice president of global product development. LaNeve is vice president of vehicle sales, service and marketing...."So many people -- before they buy a car -- they go to sites like Edmunds.com, and they look at the cost of ownership. If they see a GM or any domestic brand that's priced $1,000 under the Camry but, guess what, the first two years you lose $3,000 (in residual value), the guy doesn't have to be very good at math to realize he's better off paying the extra $1,000."The only way to solve that is to stop performing unnatural acts in the market. We just have to be patient." Link to AutoWeek article, originally published in Automotive News --> http://www.autoweek.com/apps/p...ISSUE

[jake75]

GM seems to think that their $1,000 lower price translates to a $3,000 difference in residual. That math doesn't make sense to me. I think the main difference in residual value is a perception (which may be reality) by used car buyers that a used Camry is of higher quality, e.g. Camry will have significantly fewer repair issues than a similar used GM car. Perhaps GM should calculate what an extra 2 or 3 years of bumper-to-bumper warranty would cost and use that as a selling tool rather than ever increasing rebates. If GM cars are as good as GM tells us, the cost of such an extended warranty stripped of administrative costs and high margins would likely be less than $1,000.