GM raises truck's rebate to $4,000 after sales fall

Detroit February 11, 2003; Joe Miller writing for Bloomberg reported that General Motors Corp., the world's largest automaker, increased the Chevrolet Avalanche rebate to $4,000, the highest in the company's U.S. lineup, after the truck's January sales fell 47 percent.

The discount rose from $2,500 on Friday and now is about $1,000 more than the company's next-biggest rebate, spokeswoman Elaine Redd said. The move follows a $500 rebate increase three weeks ago on the Avalanche, a large sport-utility with an open pickup bed. The latest offer ends Feb. 28.

General Motors sold 3,529 Avalanches in January, the lowest U.S. monthly total since the truck's mid-2001 debut. The automaker began boosting truck incentives in late January because sales sagged after some rebates and discount loans were scaled back earlier in the month. General Motors' total monthly sales fell 2.2 percent, more than the industry's 1.9 percent drop.

"They're still trying aggressively to maintain or increase their share of the market," said Burnham Securities Inc. analyst David Healy, who doesn't own or rate the Detroit-based company's shares. "General Motors still would rather lower prices before it lowers production."

Ford Motor Co. now offers $4,000 rebates on 2002 models of its Windstar minivan. DaimlerChrysler AG's Chrysler unit has rebates of as much as $4,500 on its Dodge Durango sport-utility in some U.S. regions.

New Version Coming

General Motors will use the increased Avalanche rebate to clear out current models as the company prepares to introduce a new version in March that eliminates black plastic cladding on the front and sides and cuts $600 from prices, said Tom Nellenbach, market manager for the vehicle.

General Motors sold 89,372 of the trucks last year, short of its 100,000 annual target. Avalanche prices before rebates range from $32,520 to $37,420, according to the automaker's Web site.

The new version will represent about half of Avalanche sales and will help the truck match or exceed last year's total, Nellenbach said.

"They want to blow out the old inventory. It's clearly a more attractive vehicle without the cladding," said Bear Stearns analyst Domenic Martilotti, who rates General Motors an "outperform."

The company three weeks ago also added $500 to rebates on its Chevrolet Silverado and GMC Sierra large pickups.

Chief Executive Officer Rick Wagoner last month said General Motors would keep pushing on incentives because scaling them back would mean lower sales and production, reducing profitability and cash flow. Some analysts and investors have said the rebates and discount loans are reducing auto industry profits.

"It's time to stop whining and play the game," Wagoner said Jan. 31 at a San Francisco conference sponsored by market researcher J.D. Powers & Associates. Under Wagoner, General Motors has led on incentives since introducing no-interest loans to revive demand after the Sept. 11, 2001, terrorist attacks.