Value Pricing Mess

GM and Ford are playing around with "value pricing" using programs called "Red Tag Events" and "Keep It Simple", and Chrysler has a "Miles of Freedom" promotion. The problem is that consumers don't understand the programs. Even though some of the prices being offered are at or below prices in the expired "employee prices to the public" programs of a couple of months ago, consumers are having a hard time seeing it.

There's nothing like the elegant simplicity of a good cash-back rebate program or price-slashing promotion. But in their attempts to begin "weaning" customers off those costly programs, car makers are having a tough time harnessing the monster they themselves have created.

These problems are almost exclusively those of the American "Big-3" car companies, two of which just announced major employee layoffs, benefits reductions, and plant closings. Meanwhile, the Asian and European car makers are simply sitting back, selling cars on the basis of quality and features, and not getting drawn into the self-destructive price and promotion wars of their competitors.