Thursday, July 07, 2005


Chrysler joins Ford, GM in offering 'employee discount'

Is it just me, or is offering the employee discount to everyone in America on every American car a sign of a little desperation? As this article notes, people are going to expect these discounts in the future--and if they don't get them, they won't buy a new car from GM, or Ford, or Chrysler.

Look at how the article ends:
Merrill Lynch analyst John Casesa agreed with that assessment in a note to investors.

''We are concerned that this everyday low price strategy has only set the domestic industry's starting price point a notch lower and in the long run will further erode brand-equity and residual values,'' Casesa said.

A discouraging sign for the Big Three is that the employee-pricing promotion did little to affect June sales of Asian brands, which continued to climb. Toyota spokesman Xavier Dominicis confirmed Wednesday the company has no plans to match the Big Three's discount program. Toyota sales were up 10 percent in June.

''Our outlook is a long-term outlook, and we're seeking sustainable growth,'' Dominicis said. ''Toyota buyers tend not to be the deal-of-the-day buyers. There's a lot of loyalty when you look at our buyers.''
What Dominicis is saying, essentially, is this: The other brands have turned themselves into the equivalent of Wal-Mart, selling cheap crap and trying to win on volume. We're going to make good stuff that people really want, and they'll be willing to pay more for it because they know they're getting something solid for their money.

And you know what? He's got a point! The only way I would buy an American car now is if I couldn't afford a Toyota. They make rock-solid cars; my last American car was a headache factory. Making the price lower isn't going to entice me back--not until I'm convinced that that price doesn't correlate to lower quality. And right now, I'm not convinced.

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