General Motors (GM): Sales Are Great! Just Don't Ask About Profits

If you’re General Motors (GM) and you just lost $15.5 billion last quarter, you’re burning through cash at a rate of $1 billion a month and your last great hope, the plug-in hybrid Chevy Volt, could easily fail, you’d celebrate the small victories, too.

So it is with great pride that GM announces that its recent sales incentives are working! WSJ:

General Motors Corp. On Wednesday said it will extend its Employee-Discount-For-Everyone deals through the end of September, citing a strong response to the incentive program….

“We’re seeing strong customer response and the dealers have been really enthusiastic,” [GM Spokesman John] McDonald said.

Of course, “strong customer response” is all relative: GM’s sales are expected to drop 20%-30% in August.

But GM will clear out more inventory than it had expected, and there’s even a chance GM will hold onto its coveted “global sales leader” title over Toyota (TM). However, this news is a small blip on GM’s radar that would be best ignored: sales incentives like this cannibalise future demand (by persuading customers to buy now) and mean that the company is sellling cars at lower-than-expected profit margins (or, worse, at a loss). Unless, now that gas prices have dropped, you’re interested in buying a discounted Hummer, GM is still in trouble.

See Also:
General Motors (GM): We Deserve A Bailout, Too
(GM, F)
Everything Must Go! GM Offers Employee Pricing To Everyone (Again)
(GM, TM)
Toyota (TM): Chevy Volt (GM) Is A Dead Man Walking
(GM, TM)
General Motors (GM) Volt: Late, Overpriced, Money-Losing, and Dreamy…But Beloved

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.

Tagged In

cars clusterstock-us