General Motors Corp. is aiming at boosting its profit margin by $200 million annually by improving resale values. Residual values rose to 44% last year from 36.5% in 2009 during bankruptcy reorganization, ALG says. Strong residuals mean that GM can offer customers lower monthly lease payments, as the cost is based on projected resale values when the contract ends.
As for GM’s marketing strategy to raise residuals…
1. The Big 3 – great products, pricing, and incentive discipline, GM North America CFO Chuck Stevens said at a Bank of America forum.
2. Boosting operating margins to be more competitive with Ford and Volkswagen – which is being pushed by CEO Dan Akerson.
3. Roll out new product – GM has 20 new models debuting in the US this after its models had grown stale.
4. Rolling out fresh models like Chevrolet Cruze with a strategy to avoid hurting them with too many discounts and capping sales to rental car companies.
5. Branding is going well for Cadillac, which saw the largest improvement among GM four US brands, rising from 34.7% to 45.6%. For Chevrolet, the Impala is an important ingredient in its brand strategy.
6. GM is boosting sales in California and the East Coast, which do more leasing than in other markets.
