Other Editorials

Incentive Mania Frustration

Jim Dollinger
Friday, July 13, 2007

To: William J. Lovejoy
Subject: incentive mania frustration
Sent: August 17, 2001

was sent to Jerry Flint of Forbes:

Sent: August 14, 2001

Programs, programs, get your programs! $400 on all Buicks (except Rendezvous) started Saturday. Supposed to be more tomorrow. Short time only. 02 Blazer 4DR 4WD old style, cloth only, good lease 10 days only. Jimmys too, just 2 DR. New game. It's called "Figure It Out Before It's Over". Customers and salespeople both welcome to play. Fine print: good only in north central region, except Michigan, unless you live in the following counties...Loyalty programs available, must have direct mail piece. So you ask the client if he got one, if yes, where is it? If no, customer is pissed. Extra discount on interest rate for customer if dealer floorplans with GMAC. Extra rebate if old invoiced unit. Different amount depending on date of invoice. Tiered dealer cash by level of achievement toward objective. Different residuals if reg cab, ex cab, 2wd, 4wd, leather, cloth, 1/2 ton, 3/4 ton, manual vs. auto, V6 vs. V8. Riddle me this Batman: What incentive do you get on a GM car? Ha Ha Ha! Answer: it really doesn't matter because when you finally figure it out, it's changed anyway.

Your latest column on annual model change was very appropriate. 01, 02, 03, they're all blurred together. There is no sense of order, or anticipation. GM is like an alcoholic. They won't change until they hit bottom. To succeed and recapture market share, we must drastically change our marketing.

Frustrated in Flint,



FROM: William J. Lovejoy
08/17/2001 01:50 PM

TO: VSSM Leadership Board Members, VSSM Region General Managers, Divisional Marketing General Managers

SUBJECT: incentive mania frustration

Lately I have been having more and more dealers tell me they are having a lot of difficulty explaining our incentives to consumers and that they also have difficulty advertising them. AT a dinner this week several dealers complained that we do a lot of short term stuff that happens after they do advertising-promotion programs. I also know that we are cutting a lot of expense items like advertising, dealer channel efforts, promotions etc, and if we could cut some incentive dollars we would have more flexability.

Research tells us that 65% of all GM consumers who purchase a vehicle don't know the incentive until the dealer tells them. What I think we should look at is to get consistent APR programs across all brands, divisions and regions and where needed do any additional incentives as dealer cash. AS a starter--all APR programs should be 1.9% for 36, 3.9% for 48 and 5.9% for 60 mos. If a particular product needed more support-give dealer cash eg-$500, $1000, or $1500 and if more money needed--then do dealer cash of what it takes and dealer can offer to double factory cash, help trade, buy down rate or take profit. By doing this type approach-all GM people--Dealer staff will know the base program--can advertise the program and explain to consumers. We could then use the planning calendar to lay out programs in advance, vary intensity by dealer cash and maybe when trying to get consensus--offer a flat dealer cash in a given month to give confidence. Guys--I have had people in the industry outside GM tell me we are wasting money and are the laughing stock of the trade--just what this article portrays us to be. There has to be a better way - that is more consistent over time and more easily understood. Keep IT Simple. Of course lease programs would be a monthly fee basis as today. Let's stop talking about this stuff and do it. We all should be able to explain our programs over a dinner table to anyone who asks and not need a computer to figure it out.

This is a reproduction of an actual email sent to William Lovejoy and the reaction it elicited.

The original document is on file but to improve website readability, we have reproduced it here.

Mr. Lovejoy's email was sent on August 17, 2001...less than a month before 911...about a week after 911 GM came out with 0% financing across the board. Could any incentive program be easier?