GM (GM) Launches Big “Sale” To Cut Inventories

By Douglas A. McIntyre Published Nov 18, 6:00AM EST

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It looked like things were getting better for the US car industry, but then along came higher fuel prices and the housing slump. Those UAW deals don’t look like such a big advantage now.

GM (GM) is launching a "Red Tag" sale. Under the program customers can get 60 months of zero percent financing on some 2007 models and discounts on some of the new 2008s.

In a note picked up by The Wall Street Journal GM says the annual Red Tag Event "is another example of GM using appropriate strategic and tactical incentive offers."

Wall St. will almost certainly pick up on the fact that this will hurt GM’s earnings in North America and make the fourth quarter a good deal tougher.

The alternative is to let inventory build up, some of it on dealer lots. And, GM is not prepared to offer much larger discounts at the end of the year to eat through that inventory.

Unless it has to.

Douglas A. McIntyre

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.