GM Rolls Out $10,000 Discount on Escalade to Fend Off Navigator
is stepping up its defense of the Escalade SUV, a cash cow for Cadillac and the company, by offering $10,000 discounts to some current customers to keep them from straying to Ford Motor Co.’s hot-selling new Lincoln Navigator. The promotion runs through May 31, according to a memo GM sent dealers that was obtained by Bloomberg News. Jim Cain, a GM spokesman, confirmed its authenticity, calling it “an exclusive private offer” designed to “keep people in the family.”
GM has ample reason to keep Escalade buyers coming back. The big sport utility vehicle generates outsize profit from relatively modest sales: Morgan Stanley analyst Adam Jonas has estimated it produces about $1 billion in annual profit, contributing to a $2 billion earnings advantage GM has across all its large SUVs over Ford. “You’ve got a fresh Navigator and you’ve got an Escalade that is not new and is starting to age.”
While the Escalade outsells the Navigator, Lincoln’s contender is quickly gaining ground.
The average price paid in March for Navigators ballooned by about $25,600 from a year earlier to $82,500, roughly on par with the Escalade, Mark LaNeve, Ford’s U.S. sales chief, said during an April 3 monthly sales conference call. Analysts estimate that profit per vehicle can top $20,000 on the Escalade. “The new Navigator has sent a signal to Cadillac that they need to be in front of this and be aggressive.”
This is at least the second significant deal GM has dangled to blunt the impact from the new Navigator. In November, GM offered Lincoln owners a $5,000 incentive to trade in any model since 1999 for a new Escalade.
The moves seem to be working: Escalade sales are up this year, and average transaction prices have risen slightly, according to Cain, the GM spokesman.
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