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GM is reducing prices for 57 of its 76 models

DETROIT — DETROIT -- Conceding that value pricing hasn't worked, General Motors Corp. said yesterday that it will lower sticker prices on 57 of its 76 models - 80 percent of its lineup - by an average of $1,300, effective today.

Mark LaNeve, vice president of sales and marketing, said he's counting on the price cuts to increase sales - and silence critics. The pricing plan, detailed at the auto show in Detroit, also is aimed at making GM pricing competitive against Japanese vehicles.

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GM's rivals said it was too soon to say how they might respond.

"I haven't seen details of what GM is doing, but the last two years, they've raised the MSRP [manufacturer's suggested retail price] of their vehicles so much that any price cuts would get their prices more in line with ours," said Tom LaSorda, president and chief executive officer of Chrysler Group.

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Ford is "still digesting the information and don't really know the impact of what they've done," said spokesman Jim Cain.

Observers welcomed the news.

"They had to do something and essentially they're firing the last bullet in their gun," said Joe Phillippi, principal with AutoTrends consulting firm.

Phillippi said the effort "appears to be a last-ditch effort to stabilize market share - setting their prices back to realistic levels compared to transaction prices. Now their products have to prove themselves."

GM will lower stickers on Chevrolet, Buick and GMC models and some Pontiacs and Cadillacs. Saab, Saturn and Hummer prices won't be cut, though Saab and Saturn lowered some stickers at the outset of the model year, he said.

The Chevrolet Impala will start at $20,990, down from $21,990. LaNeve said this makes the Impala $5,000 less than a Honda Accord and $3,000 less than a Toyota Camry in the competitive mid-size sedan segment. As for that advantage over Camry, "it's up to the marketplace to determine if a $3,000 difference is enough to buy an Impala instead of a Camry," said Irv Miller, Toyota's communications director.

Edmunds.com, an automotive Web site, will list the base prices of all GM models and those of rivals to get the message out. Seventy percent of car shoppers compare prices on the Internet.

"We've been enveloped by bad news and people saying no one wants to buy the cars we sell," LaNeve said. "That's an insult to us and our customers." The pricing strategy, he said, will focus "on product appeal, not the deal."

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LaNeve said the price cuts, in the works since August, won't be realized by making standard equipment optional.

Dealer margins, the difference between the sticker price and what dealers pay for the vehicles, will be reduced by 1 percent to 3 percent on most models so GM doesn't absorb the entire price cut. Margins now run 10 percent to 15 percent. And that could be a stumbling block at the dealer level.

Jim Mateja and Rick Popely write for the Chicago Tribune.


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