"Employee Pricing": More Hype than Help to Bargain Hunters?

Michael Englund of Business Week asserts that the popular recent "employee pricing" program used by American car makers has hidden some aggressive price raising prior to the promotion. As proof, the article points to GM's announcement that employee pricing will be extended to some new 2006 models; generally, new models do not receive promotional pricing. The author suggests that employee discount pricing follows on the heels of rebates and low financing rates as sales gimmicks; based on prior experience, the promotion will become less effective and more expected in the future. GM and Ford are asserted to never have fully recovered financially from the damage inflict on their profitability by the previous rebate and financing promotions.

Clearly, the article emphasizes the importance of "caveat emptor" in auto buying. Additionally, it may suggest that used car (especially certified or guaranteed used car options) purchases may be the way to go as many dealers probably have high inventories of used cars received as "trade-ins" from buyers using the "employee pricing". Finally, the article implies that investors should exercise care before investing in GM or Ford stock.