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GM Said to Be Planning Price Reductions

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From Bloomberg News

General Motors Corp., seeking to end six years of U.S. sales declines, will cut prices on cars and trucks representing about 90% of U.S. volume, a person familiar with the plan said Friday.

The automaker next week will cut prices on all Buick, Chevy, Pontiac and GMC brand cars and trucks and two Cadillac models, said the person, who didn’t want to be identified because the information hasn’t been released. The program would expand an August move that reduced prices or added features on more than 50 models. GM spokeswoman Deborah Silverman declined to comment.

GM Chief Executive Rick Wagoner said last month that he expected GM’s financial performance to improve in 2006 after losses totaling $3.8 billion in the first nine months of last year. GM’s 26.2% U.S. market share in 2005 was the lowest in 80 years as Toyota Motor Corp. and other Asian automakers grabbed a record 36.5% share.

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Mark LaNeve, GM’s head of North American marketing, will make a significant announcement Tuesday at the North American International Auto Show in Detroit, spokesman Jeff Kuhlman said. He declined to offer details.

GM shares rose 28 cents to $20.80. The shares have fallen 47% in the last year.

Demand for new and redesigned vehicles, including the 2007 Tahoe sport utility, should help GM reduce spending on customer incentives this year, LaNeve said Thursday at the Los Angeles Auto Show.

“With every new product we bring to market, we’d like to price it very aggressively,” he said. He hinted at next week’s announcement by saying GM would change list prices of existing models if it had to.

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Investors aren’t interested in whether GM cuts sticker prices, but whether the actual transaction, or selling price, improves as a result, said Darren Kimball, an analyst with Lehman Bros. Inc. in New York. In the past, the gap between the sticker price and the transaction price has been wide as GM has used big incentives to sell vehicles, he noted.

“It’s up to the consumer whether that price holds or not,” Kimball said of GM’s lower sticker prices. “GM’s pricing strategy continues to be a source of confusion for investors.”

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