DETROIT -- General Motors Corp., the world's largest automaker, said it will mail coupons for a $500 discount on most U.S. models to millions of existing customers and other potential buyers to boost its lagging sales.
GM's U.S. market share sagged in November to 27 percent, its lowest in decades. The company that once commanded half the U.S. market had hoped to exceed 30 percent of U.S. sales this year.Automakers sold about 17 million cars and light trucks in 1999, beating the record 16.03 million vehicles sold in 1986. Even so, GM's supply of unsold vehicles rise to 89 days at the end of November because of inroads by Asian and European rivals. That's up from 80 days at the end of October and well beyond the 60-day supply automakers try to maintain.
"They had to do something to move the metal," said Stephen Girsky, a Morgan Stanley analyst. "This company's inventories were the highest for any end-of-November period in recent memory, despite the fact that the market is very strong."
GM spokesman Terry Sullivan called the coupons "a good kick start to the year and a way to recognize our strong customer base, which is very, very interested in our products."
GM's U.S. market share peaked in 1962 at 51.1 percent, according to Autodata Corp., a Woodcliff Lake, N.J., market research firm.
Along with other U.S.-based companies, it's faced intensified competition in recent months from popular new models from automakers based in Germany, Japan and Korea. GM, Ford Motor Co, and the Chrysler arm of DaimlerChrysler AG captured 68.6 percent of U.S. sales in the first 11 months of 1999, down 1.7 points from the year-earlier period, Autodata said.
In response, rebates and other discounts have been increasing at each U.S.-based automaker.
During November, GM spent an average $1,568 per vehicle on discounts, up from $1,418 in the year-earlier period, according to Autodata. Ford spent $1,221, up from $1,134. DaimlerChrysler spent $1,350, up from $880. Toyota Motor Corp., in contrast, spend $556.
GM's new coupon could reduce the company's pretax earnings this year by $300 million, Girsky said. "That's money well-spent, if it works," he said.
The coupons could have a limited impact because they serve to motivate existing customers instead of new ones and because they'll be used mainly on models that might have sold well anyway, Girsky said.
GM last used a broad-based campaign of discount coupons to boost sales in the spring of 1998, forcing Ford and DaimlerChrysler to follow suit. Each company enjoyed an initial sales burst, but then saw the coupons decline in impact.
GM's new coupons will be mailed to existing customers and to others who have indicated a serious interest in buying a new vehicle by going to a GM dealership, Web site or auto show display. Sullivan wouldn't specify how many coupons will be mailed, other than to say "millions."
GM's new coupon offer will be redeemable between Jan. 4 and Feb. 29 on all models except the Tahoe, Yukon and Suburban sport-utility vehicles. They also can't be redeemed on Saturn, Saab, Hummer, Corvette and medium-duty commercial truck models.
Coupon recipients can opt instead for extended warranty or maintenance programs. They can use the coupons in addition to other existing discount programs, including special discounts from GM employees, as well as employees of the company's dealers and suppliers.
GM shares have risen 22 percent in the last 12 months as it recovered from 1998 strikes and on investor expectations that it may spin off its Hughes Electronics Corp. unit.