[Absolut Speed]

Last fall, GM announced a reduction in GTO production and had to offer large rebates on this brand new model to sell off inventory

In December, GM had a 301 day supply of SSR's on hand.

Then the XLR gets a production cut from 23 to 12 a day. There's a 200 day supply of them out there. Cadillac hoped to sell 6,000 annually, but through 18 months, sold just 4,744.

February, GM decides to cut $1500-$2000 off the sticker mid-year on Trailblazers/Envoys/Rainiers and currently has 0% for 60 months to get them selling again. TrailBlazer sales fell 46% compared with January 2004. Envoy sales were off 52% and Rainier 27% according to Autodata reports.

Then for March, the factory that produces the LaCrosse & Grand Prix is shutting down for a week.

Then the earnings forecast for 2005 drops 80%. Stocks drop to 8 year low.

I think this goes back to cutting the Camaro and Firebird out of the lineup.

[trackbird]

I think there is a lot at work here.

Consider that everyone is used to $50,000 rebates and 0%. If I kill off that rebate on the first of next month, I have to convince the public that the car with such a deal is suddenly worth 50k more than it is today. Does that make sense? The rebates drop the percieved value of the product in the consumers mind and once you've done that, good luck getting them to pony up full price when it was "cheap" last week.

The weak economy caused the manufacturers to get creative in order to sell cars and stay in business. This has caused an expectation among consumers that cars should be this cheap. If they discount a car $6,000, I am going to assume that they are still making a profit on it (it does not matter if they are or not, I'll assume that as a consumer. Nobody sells under cost, right? even if they make it up in financing at something over 0%). So, if I am asked to pay full price next month, I will assume that GM wants to make $6,000 profit on my car purchase. I don't feel that GM should make 6k per car and I won't buy the car. So, as they have these rebates "ending", sales fall off (the last time GM killed the rebates that I saw data on, sales dropped 48% in the next 10 days, so back came the rebates). I don't know how they will get out of this, but I don't think the Camaro/Firebird has much bearing on it (I could be wrong).