Finally some good news: GM may have a hit on its hands
But automaker warns its dealers that raising Solstice price above sticker could hurt sales.
By Brett Clanton / The Detroit News
Jonathan Wollman confesses a bias for foreign cars. That's why the 41-year-old software developer from Los Angeles is surprised to find himself so smitten with the Pontiac Solstice, a sleek two-seater coming out this summer from General Motors Corp.
"I've never owned an American car," said Wollman, who wants to trade in his Mazda Miata. "But this is really a beautiful-looking car. It's enough to really make me consider it seriously."
He's not alone. GM's performance brand already has piled up 9,000 orders for the sporty ragtop, about half the number it had planned to build this year.
But instead of celebrating, Pontiac is quietly -- and delicately -- addressing complaints that its dealers are asking "well above" the $19,995 base sticker price for Solstice, according to a memo sent to Pontiac's 2,700 U.S. dealers and obtained by The Detroit News.
The letter underscores how much is riding on the Solstice for GM, which is reeling after a $1.1 billion first-quarter loss and is counting on new models to lift sales. It also highlights the tension that sometimes develops between automakers and dealers over how to sell particular models.
The practice, while within the dealers' rights, is angering some customers who were wooed by the vehicle's low price tag, and could sour customers' experience with Pontiac for years, the memo says.
"As you sell Solstices this year, please consider more than just the near term," said the letter signed by John Larson, the general manager of Buick, Pontiac and GMC, and Mark-Hans Richer, Pontiac's marketing director. "We are at a critical point in Pontiac's resurgence and encourage a long-term perspective of the total Pontiac opportunity."
But industry analysts say inflated dealer pricing on Solstice is a problem of GM's making. The automaker ran the first ad for the car in January during a college bowl game and has been running the ads since April after the Solstice appeared in NBC's reality program "The Apprentice." Yet the car is still not available in dealerships.
The ads have created pent-up demand for the Solstice and made it easier for dealers to play off the hype to boost prices, said Mike Chung, an auto pricing and market analyst with Edmunds.com in Santa Monica, Calif.
"Now, the buzz has literally come back to haunt them," he said.
It is not uncommon for dealers to charge above sticker for a hot new model. In the 1980s, many Mazda dealers received more than $5,000 above sticker for another sporty roadster, the Miata. And some Chrysler dealers in 2000 charged above sticker when the PT Cruiser debuted. The fuel-sipping Toyota Prius hybrid also fetches sticker-beating prices.
But Pontiac contends that Solstice's $19,995 base price, including destination fees, is a crucial piece of its marketing efforts and that the rebounding brand cannot risk alienating buyers with inflated prices. Fully loaded, the vehicle is about $25,000.
"We are asking you to show leadership in the customer service and retail experience," GM officials told dealers, according to the memo. "All across the country, we have a unique opportunity to impress potential Solstice buyers, many of whom may have never considered Pontiac prior to this vehicle, let alone visited a Pontiac showroom."
Jim Hopson, a Pontiac spokesman, said the letter came in response to complaints about "a very few offenders" and that overcharging for the Solstice was not a widespread problem. And it has not deterred customers from seeking out the rear-wheel-drive roadster with the eye-catching curves, he said.
The strong early response to the Solstice has convinced Pontiac officials that a boldly designed vehicle can win back American car buyers who may have opted for Hondas and Toyotas in recent years. It could also help improve the image of the Pontiac brand. In March, GM Vice Chairman Bob Lutz described Pontiac as "damaged," along with Buick. The comment sparked speculation that Pontiac would soon be eliminated, a notion GM immediately debunked.
GM hopes the Solstice buzz spills over to other Pontiac models -- including the new G6 sedan and the upcoming Torrent midsize SUV -- and helps Pontiac rebound from a 17 percent sales decline this year.
"I don't see how it can do anything but help Pontiac," said Ed McDade, general sales manager at Ray Laethem Pontiac Buick GMC in Detroit.
McDade has taken 11 orders for the Solstice, but has resisted the urge to charge more than the price on the window, though the car appears to be his biggest hit in a while.
"Nobody likes to pay more than sticker," he said. "Although they are doing it on some of the competitors' cars, we try to avoid it."
Yet the temptation may grow stronger if new high-volume models perform below expectations or Pontiac is slow in replacing some aging models in the lineup.
The Solstice is scheduled to arrive in showrooms late this summer. But only a few customers will get them then. GM will first deliver the car to a group of 1,000 people who placed orders on April 15 in conjunction with "The Apprentice" TV show appearance. Then it will work on filling the remaining backlog of orders from dealers.
The short answer to your question is, PEOPLE TALK!!DreamerDave said:How does GM find out about the final selling price? Are they required to disclose this? Is it possible for a dealer to not report it? Or misrepresent a gouge as some other charge? I've met some dealers that make such a practice of lying to customers, it wouldn't be a great leap to "stretch the truth" when reporting to GM, if they even have to. I realize that to get a franchise pulled would hurt a dealer in a big way. But, as GM said, this is for the dealers that can't see the big picture and may not even be able to see the smaller, more personal one.
In this particular case regarding the Solstice, it is quite possible that GM's letter to the dealer's is a result of this forum, either directly or indirectly.DreamerDave said:How does GM find out about the final selling price? Are they required to disclose this? Is it possible for a dealer to not report it? Or misrepresent a gouge as some other charge? I've met some dealers that make such a practice of lying to customers, it wouldn't be a great leap to "stretch the truth" when reporting to GM, if they even have to. I realize that to get a franchise pulled would hurt a dealer in a big way. But, as GM said, this is for the dealers that can't see the big picture and may not even be able to see the smaller, more personal one.