Employee Pricing - Big Success

GM, Ford, and Chrysler all experienced record sales in July with their "Employee Prices to the Public" promotions. It was so good, in fact, that they have now extended the programs until September 6, 2005. All of the programs make it possible to get below-invoice pricing on all qualifying vehicles.

Interestingly, these promotions seemed to have created a broad level of excitement that has also created increased sales for other manufacturers such as Toyota and Honda. Sales for all brands is generally up.

Contrary to some reports, the prices also apply to leases. Don't let your dealer tell you otherwise. With the employee discount combined with cash rebates that are available, lease payments are significantly lower.

Many dealers have complained that the promotions have increased sales but hurt overall gross profits. Some like it; some don't.

For consumers, the programs have created some interesting effects. The high volume of new-car sales has driven down prices of used cars. This has happened primarily because of the high volume of trade-in vehicles resulting from the new-car buying frenzy. Dealers' used-car lots are overflowing. If you are a used-car buyer, this is a great time to buy. If you are a seller, it's not a great time.

The success of these "employee price" programs has significantly reduced dealer inventories. Therefore, if you have waited to participate, you may find your choices in 2005 model vehicles very limited in some areas.

It's very likely that GM, Ford, and Chrysler have hurt their 2006 sales because of these programs. People who were possibly waiting to buy a 2006 model have now acted early to get the good deals on 2005 models. These companies will be forced to offer incentives on 2006 models to get them moving, but the deals won't be as good as the 2005 deals.