Pick up the paper any day of the week and you'll find another story about layoffs in the automotive industry: Ford Motor Co. recently laid off of 150 to 400 workers in St. Paul, Minn., and reported that it would offer early retirement packages to hundreds of workers at its Wixom, Mich., assembly plant as part of plans to close the factory early next year. General Motors Corp.'s CEO Rick Wagoner made headlines with his planned cut of 30,000 employees.
What effect is all this negative news having on incentive programs in the automotive industry — both customer programs and sales and dealer incentives? Much like the market, the line seems to be drawn between domestic vehicles and imports.
“Though we're doing some smaller programs with these companies, many of the big travel programs have been deleted — especially with GM and Ford,” reports John Jack, senior vice president of Minneapolis-based incentive house BI. On the customer side, he has also seen “very little movement, because GM and Ford are both struggling and using discounting in the form of rebates to try and move their metal. And for Chrysler, it's pretty much the same deal. The imports traditionally haven't done a lot of incentives, and at this point, they are selling like hotcakes.”
Ed Barclay, senior vice president, Mideast region, Carlson, Minneapolis, also says that “GM and Ford have dialed back a bit.” But others have not. “Daimler-Chrysler is doing as much or more at the dealer and sales manager level as they've always done. Daimler is more aggressive on the domestic side,” he reports.
To get consumers in the door, Barclay has seen dealerships create entire events. “They're offering Home Depot and Target cards as incentives while tying these programs to events for charity such as a Habitat for Humanity or a blood drive.”
For Toyota-owned Lexus, a company that has fared well over time, it appears to be business as usual — or better — when it comes to incentives, according to Mike Childs, vehicle merchandising manager for the eastern area office of Lexus, based in Parsippany, N.J. “We have three trips a year for dealers based on new vehicle sales volume, and another tied to customer satisfaction. We've never done that many big trips.” There are no plans to cut back, he says, “because we always want to be consistent with our message, and it comes down to dealer expectations.” This year, groups will visit Vietnam, Tuscany, and Venice.
Carlson's domestic manufacturer clients face a much tougher competitive situation, but Barclay remains positive about their continued use of incentives. In the coming year, “Everyone will continue to try to drive market share,” he says. “In the domestic market, it will all be about bringing more new cars to the marketplace and launching these cars more effectively.”