$9,000 Off? Automakers Ramp Up End-of-Year Incentives to Sell Glut of Pickup Trucks

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Every year around this time, retailers go into fire sale mode when certain clothes and toys haven’t sold as expected. Automakers basically do the same thing, only with discounts on a much larger scale. Facing an oversupply of 2012 pickups unsold on dealership lots, GM is knocking prices down by as much as $9,000.

Last week, while news spread that General Motors had a glut of full-sized pickup trucks it needed to sell in a hurry, auto industry analysts were speculating that the automaker was likely to try something big. As one expert told Businessweek:

“Everybody is trying to figure out: Is GM going to do something dramatic to deal with the supply situation in December?” said Jesse Toprak, an industry analyst with TrueCar, a website that tracks new-car deals.

This week, as the Associated Press, the Los Angeles Times, and others have reported, dramatic action has been taken in the form of big-time cash-back incentives—as much as $9,000 off high-end 2012 models. (Mind you, there are plenty of pickup trucks that have sticker prices over $50,000, so the price paid out of pocket may not be cheap even with a monster rebate.) For 2013 model-year trucks from GM’s Chevy and GMC brands, the incentives will top out at around $4,500.

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Ford and Chrysler are also waving incentives in the neighborhood of $4,500 for upscale pickups, but GM—the only auto manufacturer to see pickup sales decline in November—appears to be in a more desperate situation than the competition. The auto industry is rife with data concerning the number of days it would take dealerships to sell the current supply of automobile models. Normally, a supply of roughly 60 days is favored for most cars—that amount is sufficient to give buyers a good selection, while not burdening dealerships with a glut of cars. Pickup trucks are a little different, in that a 90-day supply is considered OK. After a period of lagging sales, however, GM now has a 139-day supply of trucks. It is ramping up incentives accordingly with the hopes that they’ll help get more consumers in the market for trucks off the fence and behind the wheel of a new GM truck.

Because something of a discounting arms race has developed among all automakers competing for the dollars of the truck-buying public, right now is shaping up as an ideal time to purchase a pickup from any brand out there. “Shoppers who are in need of a pickup should not hesitate to scoop up a great deal on a highly incentivized 2012 model-year truck,” Kelley Blue Book analyst Alec Gutierrez announced via press release. “For those not quite ready to pull the trigger, there will be new and improved products arriving over the next 12-18 months that may not have the same aggressive cash incentive offers, but could make up for it with better fuel economy, power and standard amenities.”

For that matter, December is generally a terrific time for finding bargains on all sorts of vehicles—leftover models from last year especially. While there is much debate as to what time of year is best for getting a deal on a new car, the end of December is always part of the conversation. The Detroit Bureau’s Paul A. Eisenstein recently rehashed a few of the reasons why dealerships are more willing to deal at this time of year:

For one thing, most shoppers are focused on other matters, whether a necktie for dad, some perfume for mom, or toys for the tots. Showrooms can be downright lonely places this time of year but dealers still have their own bills to meet – and gifts to buy – so they’re often in a mood to do what it takes to get you to buy.

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In certain cases, squabbles among automakers contending for top overall sales in specific vehicle categories can result in huge discounts for car buyers. Data from R.L. Polk & Co. indicate that BMW and Mercedes-Benz are battling it out for 2012 luxury car sales crown, while the Chevy Camaro and Ford Mustang are neck and neck in total sales for muscle cars. Because automakers like to brag that their car was the #1 selling car for the year in a given vehicle category, and also because dealerships are trying to reach end-of-the-month and end-of-the-year sales goals at the end of December, the pressure on dealership sales staffers to close deals with new-car buyers is heightened right now. “This can result in savings to the retail customer over and above what is available at other times of the year,” Polk’s Tom Libby explained to the Los Angeles Times.