Dec. 29, 2009 -- General Motors is offering dealers the chance to purchase their remaining Saturn and Pontiac vehicles at deeply discounted prices in an effort to clear their roles of the defunct brands.
The automaker will give dealers a $7,000 discount to buy new cars sitting on their lots and use them for at least one month as rental vehicles; those cars can then be sold as used at a reduced rate to customers, according to a GM spokesman.
"It's a program designed to help put Pontiac and Saturns into daily rental operations. Many dealers have daily rentals -- say, if a customer comes in for service. The primary purpose of the program is to let dealers replenish those fleets. It helps us reduce inventory of Saturns and Pontiacs and focus on our core brands: Chevy, Buick, Cadillac and GMC," GM spokesman Tom Henderson said.
The incentives are part of a major GM restructuring plan that will allow the company to jettison underperforming brands. In addition to shuttering Saturn and Pontiac, GM is selling Hummer to a Chinese company and is considering closing Saab.
The dealer offer -- as first reported Tuesday by the Wall Street Journal -- will expire on Jan. 4.
Consumers looking to buy brand new Pontiacs and Saturns can currently get a $6,500 discount, but the company hopes that consumers who don't buy now will be encouraged to buy slightly used cars that dealers rented briefly, for as short as one month.
It is a gamble for dealers, whether they try to sell the cars directly to customers now or essentially buy them from themselves and then try to sell them later, said James Fibraion, a dealer at Miller Buick Pontiac GMC in Woodbridge, N.J.
"It is a roll of the dice if you can't sell them," said Fibraion.
The Journal reported Tuesday that "if a dealer passes along all the new incentive to a customer, Pontiac's cheapest vehicle, the G3 compact, could go for about $8,000, or 46 percent off the sticker price of about $15,000."
Both GM and Fibraion were skeptical that average customers would see savings as great as 46 percent.
"Mathematically, it's possible," Henderson said. "Practically speaking, at the end of month we have 14,000 Pontiac and Saturn vehicles combined in stock. You'd have to find the exact right vehicle to get the 46 percent. Is it possible? Yes. Is it practical? No."
"We have had a lot of phone calls since the Wall Street Journal story, and more traffic today than in quite some time. One gentleman came in and I had to tell him there no such thing as a 46 percent discount," Fibraion said.
GM typically offers discounts that are much smaller. According to the auto research Web site Edmunds.com, GM's incentive spending in November totaled $4,270 per vehicle, on average.
Sales of Saturn and Pontiac have declined sharply this year, according to The Associated Press. Saturn sales have plunged 61.5 percent through November, according to Autodata Corp. Pontiac sales have slid 32.3 percent and GM's companywide decline this year is 31.8 percent.