Employee Pricing for All Crosses the Pacific

For those of you who saw any prime time television last Sunday night (23rd October 2005), you may have noticed that Holden (General Motors, or GMH here in Australia) launched an “Employee Pricing for All” initiative. Sounds familiar? Of course it does…..if you’ve been keeping an eye on the US motor vehicle industry over the northern summer, you’ll know this campaign has just blown in from the other side of the Pacific Ocean.

According to my sources, GMH employees get discounts of between 10% and 20% depending on their length of service. By my calculations, some of the vehicles on offer are at the lower end of that range, so not everyone who works there will be totally disenfranchised that any Tom, Dick or Bruce can get the same discount as them.

The discounts apply on vehicles with compliance plates pre-dating the 1st July 2005, so obviously there is an objective of running out inventory before the new season’s model arrives. But there is a very good chance that the program will just bring forward purchases that were planned for the new year and new model(s).

Who is the winner here? At this stage, we don’t have a price war on our hands yet: three days on and there is no sign of a response yet from any other Australian vehicle manufacturer (Ford, Toyota & Mitsubishi). Nevertheless, as with any other price war, the real and only winners will be the consumers, (i.e. Holden buyers). After all, AMR Research estimated that US employee pricing schemes in the US by Ford, GM & Chrysler cost $5bill in revenue leakage from the industry. And two of those companies announced their third quarter results last week, losses of $US1.6bill and $284m for GM & Ford respectively.