GM Executive Sees No 'Letup on The Incentive Front'

Monday 3:31 pm ET

By Gregory L. White, Staff Reporter of The Wall Street Journal

DETROIT September 23, 2002--Greg White writing in The Wall Street Journal reports that price pressures in the U.S. auto market are likely to remain intense for the foreseeable future, helping sustain demand despite signs of softness elsewhere in the economy, a top General Motors Corp. executive said Monday.

"I don't see any letup on the incentive front," Gary Cowger, president of GM's North American operations, told reporters, noting that discounts are likely to decline slightly on the 2003 models now arriving in showrooms in comparison to the unusually generous offers now available on the remaining 2002 inventory.

Last week, GM reinstated 0%-financing on its remaining 2002s in what executives said was an attempt to remain competitive.

"Everybody's out there with the gloves off," he said, referring to aggressive discounting by both domestic and foreign auto makers on outgoing 2002 models. " People are really bargain-hunting."

He noted that 0%-financing offers are effective at the moment in drawing customer to showrooms, but pointed out that the deals sometimes need to take other forms, such as cash rebates, to be effective.

"There'll be other incentives," he said.

Mr. Cowger said September industry sales are running roughly in line with last year's performance. That would mean a substantial decline from the near-record pace seen in August, but still a strong result. According to Autodata Corp., sales in September 2001 ran at a 16.2-million-vehicle annualized rate. " September looks like it's going to be a good month," he said.

Mr. Cowger said GM expects industry sales of about 17 million vehicles this year, with strength continuing in 2003. "I don't see it moderating a whole lot," he said. "We're fairly optimistic."

He said GM will continue its drive to rebuild market share. Mr. Cowger and other GM executives have been wearing lapel pins with "29" under the GM logo, a reference to their internal goal for market share. Asked about what the pins will say next year, Mr. Cowger commented that "30" is the next number in sequence. "I just want to improve year over year," he said.

GM's market share was 28.7% in the first eight months of this year, up from 27.9% a year earlier.

Mr. Cowger said GM will continue to push efforts to reduce costs to mitigate the impact on profits from the discounts. "The goal is we keep driving cost out the way we have been," he said.

But after several years of cutting 10% and more of its white-collar work force through buyouts and attrition, he said the pace of those reductions is likely to slow next year. "We have overachieved on our salaried productivity, so you'll start to see that mitigate next year," he said, without providing a specific target.