This column by Doron Levin for Bloomberg News is titled, "Next For GM -- Buy One, Get One Free?"
From that title, I thought it would be yet another piece reminding us of how the once mighty General Motors had fallen. You know, where yet another journalist could meet deadline and fill his allotted copy space by telling us that GM has lost massive market share over the years, that its cars can't compete with those made by the likes of Toyota or Honda, that its popular heavy trucks and SUVs are getting hit by high oil prices, and that massive health care expenses will surely doom the company eventually.
We doubtlessly know the rap sheet by now.
And then I figured I'd be (yet again) pointing out that even if GM has morphed into a mediocre company, it can still be a good investment if we bought its stock at the right price. That its various parts add up to significantly more than its current market capitalization. (Regular readers of this site no doubt know my reasons for buying the stock.)
Then I read Levin's column and found it's really about Detroit as a group -- GM plus Ford and DaimlerChrysler's Chrysler Group -- and the group's challenges in taking on the foreign car makers. I was glad to see it's actually a balanced piece of work.
Specifically, Levin wonders if the wildly-successful discounts being run by GM, Ford and Chrysler will ultimately condition consumers to "expect" sale prices on new cars -- and only buy when such discounts are available.
That concern rings true. I can remember (back more years than I care to) when quality department stores NEVER ran sales on NEW merchandise before Christmas. Then, slowly but surely, the stores started running more and more sales, on brand new items, even during peak shopping season. Eventually shoppers became accustomed to only buying items when they were on sale. This has been the case for at least two decades or longer. And I'm not talking about Sears-type stores, either.
I have no idea if that will be the case for Detroit. Besides, the retail department stores haven't exactly become extinct.
For GM, its employee-discount-for-everyone promotion has been used to clear inventory and make way for GM Vice Chairman Lutz' new models. Will the Lutz-inspired generation of GM vehicles sell without special discounts? We'll see.
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