GM is quietly slashing prices on base models
While General Motors' fourth quarter financial figures haven't yet been released, the automaker seems to be weathering a potentially rocky time well, even beating third-quarter projections last year. To keep the climb going, the company is launching new base trims for several popular models that make them cheaper than ever but with tight dealer margins.
The new entry-level trims are the Chevrolet Cruze L, Equinox L, GMC Terrain SL and Buick LaCrosse 1SV. Buyers lose some content by picking them, but the prices are slashed. According to Cars Direct, the biggest savings are on the LaCrosse, where customers pay $31,065, plus $925 destination, $2,570 less than the previous base 1SB trim but must accept things like 17-inch wheels and no cargo net in the back.
If you're wondering how Buick can remove only a little equipment but cut the price so much, it's because the company also slashed dealer margins. According to Cars Direct, the difference between the invoice and MSRP for the LaCrosse 1SV is only around $150, compared to around $1,350 before. The disparity is even greater for the Cruze with an $81 difference in the prices, compared to about $600 for the LS version.
Showrooms are expected to keep very low stocks of these trims, though. "Dealers use such vehicles to get people in the door, but they do not generally want to do high volumes of these strippers. The margins are next to nothing; they don't make much money off these cars," said Ed Kim, Vice President of Industry Analysis for AutoPacific to Autoblog.
Dealers are also expected to advertise that these new base trims undercut major competitors. For example, the Cruze L rings up for about $2,320 less than a Honda Civic LX, according to Cars Direct. One potential drawback for buyers is that these models might not be eligible for incentives.
While the attractive prices might get customers into dealers, folks may not actually end up driving home with these entry-level models. Kim indicated base trims also make up a small portion of the sales mix. "Consumers aren't asking for stripped out vehicles, even at the low end of the marketplace," he said.Featured Gallery2015 Chevrolet Cruze
News Source: Cars DirectImage Credit: ChevroletBuickChevroletGMGMCCar BuyingCar DealersUnited StatesCrossoverSedanbuickbuick lacrossecar dealershipscar salescheap carschevychevy cruzechevy equinoxgmgmcgmc terrainI'm reporting this comment as:Rude or offensiveNot constructive / off-topicSexual contentSpam or misleadingOtherReported comments and users are reviewed by Autoblog staff 24 hours a day, seven days a week to determine whether they violate Community Guideline. Accounts are penalized for Community Guidelines violations and serious or repeated violations can lead to account termination.
I'm sure you know that dealers can make money all over a deal, not just on the markup over invoice. Financing, warranties, underbody coating, dealer-installed options (tint, etc.), are all moneymakers. Aside from that, "invoice" doesn't even really mean the same thing it used to, thanks to Consumer Reports publishing invoice prices years ago. Modern "invoice" prices do not reflect the sometime substantial holdbacks, dealer incentives, etc. tied to selling the car. As a result, unless you're being sold a car on the lot that nobody wanted (even if you're paying cash), the dealership is almost always going to make money on the vehicle, even if they are selling it significantly under the invoice amount.
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