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Troubled GM Division Eliminating Price Haggling, Slashing Dealerships

August 23, 1993

ORION TOWNSHIP, Mich. (AP) _ Oldsmobile said Monday that nearly all its 1994 vehicles will carry a non- negotiable price, expanding a strategy that other carmakers have found increasingly popular with consumers.

General Motors Corp.’s oldest and most troubled division, once rumored to be on GM’s chopping block, also gave details of how it will drastically shrink the number of Olds dealers nationwide, which now total about 3,100.

The disclosures came during a briefing by Olds executives at the division’s assembly plant in Orion, Mich., where they showed the 1994 vehicle lineup to the automotive industry press.

Dave Lahti, general sales and service manager, said 95 percent of dealer orders for 1994 are expected to be so-called ″value-priced″ models, in which customers buy vehicles with popular options, as is, at a pre-fixed price. There are no rebates or other gimmicks.

Many consumers prefer this method of buying a car, avoiding the hassles and frustration of negotiating with showroom salespeople.

Sales of Olds vehicles through Aug. 10 are down 9.1 percent, and the division has no new models to show this fall. For all of 1993, Olds sales are expected to total 388,000. That’s less than half levels of a few years ago.

Still, Olds officials said they believe sales in 1994 will rise to about 11 percent when the division debuts a heavily hyped 1995 model, the Aurora luxury sedan. It goes on sale next May priced at $32,000, targeted at customers who might have opted for a Toyota Lexus or Nissan Infiniti.

Olds expects Aurora to be its flagship vehicle as it ushers in a number of other changes. The most radical appears to be shrinking its dealer base.

General Manager John Rock declined to specify the extent of the cutback. But just in the top 60 or 70 markets alone, he said, 300 dealers seemed a likely target.

To a large extent, Olds is emulating GM’s newest division, Saturn Corp., which has won acclaim for high-quality small cars aimed at recapturing customers from Japanese imports.

For example, Olds is running a prototype of a new customer-friendly sales strategy at its four stores in Columbus, Ohio, akin to how Saturn dealers treat their clients.

The overall number of Olds models for 1994 was cut from 22 to 15. Pre-fixe prices range from $13,995 for an Achieva coupe and sedan to $24,995 for a Bravada sport utility vehicle. Olds has redesigned interiors on the 88 and 98 models and is offering a new engine on the Achieva and the Cutlass Ciera and Supreme.

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