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Last Updated: Tuesday, 2 August 2005, 19:32 GMT 20:32 UK
GM and Ford slash vehicle prices
GM discount signs at dealership
Slashing car prices gave US carmakers a sales boost
Carmaking giants Ford and General Motors (GM) have cut their prices in an effort to boost US sales.

GM recently ended its Employee Discount for Everyone drive, and is now offering a "Total Value Promise" instead.

With the discounts, Ford and GM hope to lower spending on customer incentives while boosting the resale value of their vehicles.

The move follows Japanese carmaker Toyota's announcement last week that it would be raising its 2006 prices.

The move, accompanied by improved warranties and other features, is designed to wean buyers from steep discounts and other sales incentives which have buoyed sales volumes and kept assembly plants running in recent months.

On Tuesday evening GM said US sales in July rose 20%, greatly helped by the employee discount programme.

Sales were 530,027 vehicles in July compared with 459,263 in July last year, with the figures adjusted to account for one extra selling day in July 2004.

Discount costs

DaimlerChrysler's US division may follow suit with a employee discounts for customers, reports suggested.

US carmakers have been hit by tough competition from Asian carmakers like Toyota and Nissan.

GM and Ford have seen high costs and widespread discounting eat away at their profits in recent months.

GM said its new Total Value strategy would see hundreds to thousands of dollars knocked off 30 of its 76 models - in an effort to lower its spending on buyer incentives and enhance the resale value of their vehicles - what the car is worth when it is sold on after three years.

For example, the price of GM's best-selling Silverado Crew cab pickup truck has been cut by $3,055.

Ford followed suit, as well as extending its employee discount offer to 6 September.

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