GM Employee Discount to End

General Motors Corp. said Thursday that it would end its popular employee discount sales program at the end of this month.

Instead, the company plans to cut its retail sticker price on new models to bring them closer to what the cars and trucks have actually been selling for and to reduce its reliance on steep discounts.

“They should do better that way than with grossly inflated sticker prices,” said David Healy, auto industry analyst at Burnham Securities Inc.

GM began its employee price plan in June and its sales jumped as the company rapidly depleted its inventory of 2005 models.

“GM has only 38 days’ supply of cars left, and the norm is 45 days, so they just don’t have much selection left for customers,” said Paul Taylor, chief economist for the National Automobile Dealers Assn.

Ford Motor Co. and the Chrysler Group of DaimlerChrysler followed GM’s lead with employee discount pricing programs of their own in July. Both automakers have said they would end their programs Oct. 3. Chrysler still has a 66-day supply of cars, while Ford has a 45-day supply, Taylor said.

Although GM, Ford and Chrysler saw their sales rise from the employee-discount plans, Asian and European automakers saw gains without matching them. And in August, Asian automakers captured a record 39% of the U.S. auto market.

Regardless of what GM calls its next price plan -- and whether competitors follow suit -- analysts expect discounts to continue in some form.

“They can’t disappear overnight,” Healy said. “But GM was averaging close to $4,000 per vehicle [in discounts], so if they get sticker prices closer to reality and spend about $1,500 a vehicle on incentives, this new plan will probably work.”

With gas prices remaining high, truck and sport utility vehicle prices are likely to continue being cut. All three U.S. automakers have more than 60 days’ supply of these vehicles.

“You’ll continue to see cutthroat pricing on them, no matter what they call the program,” Taylor said.

Although well-received by consumers, the various employee-discount pricing plans generally haven’t offered better bargains than could be found under earlier rebate, discount and other incentive plans they replaced, Healy said.

GM shares fell 60 cents Thursday to $32.40.

Bloomberg News was used in compiling this report.