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Discounting Added 100,000 Sales, Claims GM CEO

Not a “predictable competitor,” Akerson says.

by on Apr.20, 2011

GM CEO Dan Akerson: not a "predictable competitor."

General Motors sold as many as 100,000 more cars than it might have, during the first quarter, by unexpectedly increasing its incentives, CEO Dan Akerson said at an industry conference marking the start of the New York Auto Show.

The maker surprised analysts and competitors alike when it boosted rebates and other givebacks by about $400 a vehicle during the early days of the new year, a time when rising demand led some makers to curb their incentives.

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“I don’t want to be a predictable competitor,” explained Akerson.  “I don’t want the other guy to know exactly what I’m doing.”

Industry observers have questioned the move, which cuts into the maker’s cash flow and potential profitability.  But the added demand more than justifies the cost, the GM CEO asserted.

Meanwhile, GM has since pulled back on incentives, in March reducing spending on deals by as much as $800 a vehicle.

That didn’t completely satisfy investors, however, who have sharply driven down the maker’s stock to just $29.59 at the closing bell, on Tuesday, more than $3 below the strike price at last November’s GM IPO.

During a speech and subsequent question-and-answer session, Akerson that GM is nonetheless “in pretty good shape.”  He also suggested the dealers that survived a round of retail network cuts, after GM’s 2009 bankruptcy, are also doing fine.

“More than 90% of GM Dealers are now profitable,” said Akerson, telling the crowd that thanks to the pain endured by closing selected U.S. dealers, those remaining are hitting new levels of profitability which they are reinvesting in “people, processes, and property.”  Over 75% of GM dealers will have completed reinvestment programs by the end of 2011.

During his appearance, Akerson said there have been no discussions between GM and the U.S. Treasury on when the remaining government stake in the carmaker will be sold off.

“They will tell us when they’re getting out. I will not tell them when they’re getting out, and I don’t know what’s going to go into their calculus,” he said.

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