GM to End Popular Incentive

General Motors Corp. will end its wildly popular employee discount incentive program as soon as Monday, a move the other domestic carmakers are likely to follow as they rework marketing plans before 2006 models hit showrooms.

One thing for sure, discounts aren’t going to disappear.

Weaning consumers completely away from incentives “would be tough,” said auto marketing analyst George Peterson of Tustin-based AutoPacific Inc. “Customers have become accustomed to ... rebates and other big incentives they can brag about to their friends when they come home with that new car.”

GM executives Wednesday wouldn’t comment on the kind of promotion or discount that would replace employee discounts, saying only that the company would spend August focusing on pricing and marketing strategy for 2006 model-year vehicles.

But last week, as GM announced a second consecutive quarterly loss, executives said the company would lower sticker prices on many 2006 models.

Spokesmen for Ford Motor Co. and Chrysler Group said they would not announce new plans until their employee discount programs expired Monday.

GM began the employee discount campaign in June, and Ford and Chrysler matched it this month. The plans have helped the companies and their dealers get rid of backed-up inventory.

In June, GM sales shot up 41%, and this month its sales are up about 40%. Ford and Chrysler dealers are reporting 15% to 20% increases for July. Meanwhile, GM’s unsold vehicles dropped to a 48-day supply July 1 from 73 days a month earlier, according to Automotive News.

But the discounts also have cut into dealer and manufacturer profits and contributed to GM’s $286-million second-quarter loss. This year, GM has lost $2.4 billion in its North American automotive operations.

All three domestic automakers are spending more than $3,000 per vehicle on incentives, including their employee discount plans. Most Asian and European import brands also offered incentives, but none matched GM’s wide-ranging employee discount.

Whatever GM does next, it is merely ending one program, not eliminating incentives entirely.

The auto industry has trained a generation of car shoppers to expect cash rebates, low interest rates and lease terms and other price-reducing ploys as part of the new-car buying process.

In fact, a poll of Internet-using car shoppers by Harris Interactive and Kelley Blue Book Marketing Research found that 51% of those who expected to buy a new vehicle within the next year would not consider a discount-free deal.

That’s Bill Weston’s attitude.

The Huntington Beach resident, a retired government worker, is looking to replace his 5-year-old Ford Crown Victoria sedan and on Wednesday afternoon was peering at sticker prices on a Costa Mesa Chevrolet dealer’s lot.

“I thought I’d better look before it goes away,” he said of GM’s and other employee purchase plans -- which added about 5% to the other rebates available on most domestic cars and trucks.

“There’s a psychological thing” to discounts, Weston said. “You get a discount and you think you’re getting a pretty good deal.”

It would be difficult for a car dealer to convince him that a sticker price, even if appreciably lower than that of the previous year’s model, shouldn’t be sweetened with an extra discount, Weston said.

GM shares fell 6 cents Wednesday to $36.90, while Ford rose 2 cents to $10.88. DaimlerChrysler, Chrysler’s parent, closed at $43.97, up 99 cents.

Times wire services were used in compiling this report.