GM is offering dealers up to $7,000 to clear out inventories of Pontiac and Saturn models.
Big sales are typical in the days after Christmas, especially if you’re looking for holiday cards, wrapping paper and ornaments. But General Motors is offering some big deals of its own on two of the brands it will soon abandon, and they make the sales at the local discount malls seem paltry by comparison.
At Jim Causley Buick-Pontiac-GMC, in the Detroit suburb, shoppers are being offered $6,500 discounts on models such as the Pontiac G3 and Solstice roadster, “and they’re going fast,” says salesman Mike Smith before rushing off to deal with a line of waiting customers.
That’s a sharp turnaround from earlier in the month when Causley’s showroom was uncomfortably quiet, particularly for the Pontiac brand, one of four marques GM decided to abandon – along with Saturn, Saab and Hummer – as part of its bankruptcy reorganization. Worried about being able to service or sell vehicles sold by those brands down the road, many potential customers were steering clear. So, GM decided it would need a year-end clearance sale of its own, telling dealers in a December 23rd letter that it would rebate them $7,000 for every vehicle shifted from retail lots to either fleet or rental accounts. That’s effectively a sleight-of-hand way of giving the dealers a big bonus to show the vehicles as sold before the program expires, on January 4, 2010.
Dealers can still sell the cars and crossovers to retail customers – and use as little or as much of the $7,000 as they need to build demand. That’s a significant amount of money – though not an all-time record rebate. On the base model of the entry-level Pontiac G3, Causley’s $6,500 incentive works out to roughly 43% off the hatchbacks $15,055 list price. Even on the big G8 sedan, that works out to a nearly 25% discount, depending on trim and accessories.
The last Pontiac rolled off the assembly line at the end of November, but GM had been winding down production of Saturn and Pontiac products for several months before then. So, by the beginning of this month, Ward’s Auto Reports estimates dealers had only about 14,500 vehicles bearing the two brand badges on their lots – down from 102,000 when GM filed bankruptcy, on June 1st.
Industry sources predict that perhaps just 4,000 Pontiacs and Saturns might be left by New Year’s Day.
There are downsides to the new deal. Buyers won’t qualify, for example, for a zero-interest, 72-month loan program GM had already launched on Saturn and Pontiac products. And, technically, the new vehicles will be considered “used,” even though that’s just the result of some paper shuffling.
But the maker is hoping that in this economy, big deals overwhelm all other concerns.
Industry experts say potential Pontiac and Saturn buyers shouldn’t be worried about getting the vehicles serviced even after the brands are gone and many of their old dealers close their doors. Key parts, including engines, brakes and suspension components, are usually shared with other, surviving GM brands. And the maker will still be required to produce replacement parts, by law, for at least seven years.
Meanwhile, GM has promised to continue providing warranty coverage through the roughly 4,000 remaining dealers who will continue to represent Chevrolet, GMC, Buick and Cadillac.
But, “When you look at one of these car you shouldn’t only look at what it costs new but also what it will be worth used,” cautions Charlie Vogelheim, Editor of Intellichoice, an online service that compares the value of different vehicles. “They’re not going to hold their value as well as other brands because they’ll be ‘orphan’ products,” a term used to describe brands that have gone out of business.