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GM Employee Discount - Is it really a good deal?

Consumer Reports News: August 29, 2008 12:16 PM

Automakers and dealers are anxious to sell 2008 models and make way for the 2009s. With car and truck sales down and the end of summer fast approaching, we have seen a wide range of sensational incentives advertised, from traditional rebates to buy-one-get-one offers. Among the hyperbole-laden ads, General Motors’ Employee Pricing for Everyone has attracted much attention, resurrecting a previously successful strategy.

The idea is simple: give the public the same price on cars offered to employees. Rather than a complicated matrix of incentives, this boils down an enticing offer into a tidy sound bite. But is it a good deal?

How it works
The Employee Discount for Everyone is available at participating Buick, Chevrolet, Cadillac, GMC, Hummer, Pontiac, Saab, and Saturn dealers on virtually all remaining 2008 GM vehicles in stock. In addition, a few 2009 models are eligible, including the Chevrolet Cobalt and HHR; Pontiac Vibe and G5; and Cadillac CTS. (Of these 2009 models, only the HHR meets our standards to be Consumer Reports recommended. We do recommend several 2008 GM models.)

The program started on August 20 and runs through the Labor Day weekend to September 2, 2008.

Shoppers can look on the various GM-brand Web sites to check the Employee Price or at GM.com. Both retail (MSRP) and Employee Price are listed for comparison, along with additional national and regional customer-cash rebates. At dealerships, special stickers present this same information.

What is the value of the deal?
For our report on "Driving a great, end-of-summer new car deal," Consumer Reports Auto Price Service tracked 2,014 national incentives across all vehicle variations this month. Since large trucks and SUVs are stuck in a sales downturn (no surprise considering the gasoline prices these days), we found that the size of the incentives often varies in direct proportion to the size of the vehicle. For example, Hummer has the highest average combined customer and dealer incentives per model at $5,400. (For a complete breakdown, read "New car incentives by brand.")

To assess the Employee Pricing program, we ran the numbers on several vehicles, comparing informed negotiation against advertised employee pricing. In these examples, we found the Employee Pricing to be a good deal.

For the analysis, we pitted the advertised GM offers on sedans, SUVs, and pickup trucks, against the Consumer Reports Bottom Line Price (which factors invoice price, rebates, hidden dealer incentives, and dealer holdback) then added a slim 2-percent dealer profit. For these example models, we found the Employee Pricing to be, on average, $345 better than traditional negotiation.

The example below illustrates how the GM Employee Discount for Everyone pricing compares to aggressive negotiation. The GMC Acadia is a Consumer Reports-recommended vehicle.

GMC Acadia AWD SLE-1

Traditional negotiation   GM Employee Discount  
MSRP*
$32,885
MSRP*
$32,885
Invoice
$30,060
GM Employee Price
$29,981
Bottom Line Price
$28,330
Customer Rebates
$1,500
Estimated Sale Price
$28,897
Sale Price
$28,481
Savings against MSRP
$3,253
Savings against MSRP
$4,404
Savings against MSRP
10%
Savings against MSRP
13%

* Includes destination charges

Bottom line
As this analysis revealed, there are indeed good end-of-summer deals to be had on new cars. With any car purchase, it pays to check the numbers to see if they add up to a good deal and to reveal what potential there may be for further negotiation.

Driving a hard bargain is only one part of the equation. Remember, a great deal on a bad car is no deal at all. Focus first on creating a list of good, safe, reliable cars with average or better projected owner costs (a quick process using our New Car Selector). Then look to reading road tests, taking test drives, and reviewing the numbers.

We maintain a list of Best New Car Deals on CR-recommended models that can highlight standout national offers. To truly arm yourself for negotiation, a complete pricing and incentive breakdown is available in our new- and used-car price reports.

Jeff Bartlett

   

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