General Motors Corp., the world's biggest automaker, added 2006 models to its offer of employee discounts for all customers yesterday and extended the program through September.
Some large 2006 sport-utility vehicles and pickup trucks, including GM's Cadillac Escalade and Chevrolet Silverado, were added to the offer for the first time, GM spokeswoman Deborah Silverman said. The promotion, which already applies to most 2005 models, was to end Sept. 6.
GM's inability to sell cars at full price has left its U.S. auto operations with $3 billion in first-half losses. Moody's Investors Service yesterday reduced the company's credit rating to high-risk, high-yield junk, citing the need for GM to reduce its dependence on large incentives.
GM unveiled the discounts in June in response to market-share losses to Asian rivals such as Toyota Motor Corp. and to clear out bloated inventories of cars and trucks at dealers. The promotion helped boost Detroit-based GM's U.S. sales by 47 percent in June and 15 percent in July.
Ford Motor Co. and DaimlerChrysler AG's Chrysler Group followed by a month, helping slow Asian automakers' gains in U.S. market share. June and July were the first consecutive months that Asian companies failed to increase share since 2002.
The new discounts may pressure Ford and Chrysler to continue their own promotions and add more 2006 models or risk losing market share to GM, which had 29 percent of the U.S. auto market in July. Ford plans to review its employee pricing program when it expires on Sept. 6, spokesman Jim Cain said.
Ford, which was also lowered to junk by Moody's yesterday, cut about 1,000 U.S. salaried jobs in the second quarter and is in the midst of paring another 5 percent, or about 1,700 jobs, out of its North American automotive workforce.
Chrysler plans to continue the employee pricing on 2005 models "indefinitely" and doesn't currently offer the rebates on 2006 models, spokesman Kevin McCormick said yesterday.
GM is trying to increase sales so it can end North American production cuts, which Chief Financial Officer John M. Devine said last month were the main cause of a $1.2 billion first-half loss for the automaker. GM cut first-quarter North American production 12 percent and second-quarter output by 10 percent. It plans to trim third-quarter production 9 percent.
Automakers book revenue when they ship cars from the factory, not when they're sold at dealerships, so a cut in production means lower revenue and profits, Devine said.