Report: GM seems to be addicted to offering discounts

Eyes all over the industry are set on GM right now, as it enjoys a sharp sales surge in the wake if heavy incentives and deals. While GM defends its level of incentives and says that they are not much higher than those of the industry at large. There is a danger, analysts warn, in sparking a price war, that could lead to legions of unsold cars, spelling catastrophe for the industry that has finally been showing signs of life after a near-collapse almost two years ago.

Over production is one of the main attributes credited with leading to the automotive collapse, especially with regard to GM.

“The real question is Ford (F, Fortune 500) and how much longer they will allow GM to add share without responding with price cuts of their own,” said Jeremy Anwyl, chief executive of Edmunds.com.

Ford’s share for the first two months of 2011 was down 1.3% when compared to the same period in 2010, while GMs share rose. Incentive spending for that period in 2011 was considerably higher on the part of GM – almost $1,100 per vehicle. GM says that incentives can not take the sole credit for the sales increase enjoyed by the company.

– By: Stephen Calogera

Source: CNNMoney