General Motors has announced that it will cut prices and continue deep discounting to boost sales, all after very bad quarters for Ford, GM and Delphi’s bankruptcy filing. General Motors needs to recapture its market share losses, which were taken by Japanese automakers, with its more fuel-efficient cars. Some say the slight pullback in fuel prices will help GM regain some of its recently lost market share.

GM has negotiated reduced health care with its union as it was cost intensive and out of control. Financially speaking, most financial analysts say that GM is strong and can weather the storm, but that it is, in fact, a serious crisis. Some question whether a price war instigated by General Motors is a smart move when the company is losing money.

The airline industry may also continue to bleed. Delta Airlines lost $1 billion in the third quarter and is already bankrupt, with some asking if it will ever emerge. The answer was to cut costs, and the smaller feeder airlines in sync with their larger flights are also bankrupt. The airline says it has won some pay concessions from its unions, including the pilots’ union. Now he wants to do more international routes, such as to Europe and Asia, but with bird flu, travel may be hampered. Additional fuel costs are still too high and the airline is still losing money. Meanwhile, the final nail of death is that discount airlines are increasing the pressure to lower prices.

Something has to give in these industries or they cannot survive as they have before. It may be too late for some players in these sectors and full overhauls and deep cost cutting may be required. That means job losses, more bankruptcies and trouble for our Nation’s economic engine. Think about this.

GM’s New Incentives May Spark a Car Price War
General Motors is taking the lead in what may become the next new car price war.

GM has announced a new “red tag” price incentive program on cars and light trucks through January 1. 3. GM has been suffering from multi-billion dollar losses and declining North American market share. Under the program, dealers will post maximum flat prices on most 2005-2006 Buick, Chevrolet, GMC and Pontiac models, up to $3,000 off list price. GM said prices will be consistent across the country, excluding taxes, title costs and dealer fees. The company said its incentive round combines features of its recent “GM Employee Discount for All” program and last December’s Red Tag program. An analyst in Tokyo said the move was likely to trigger a new round of price cuts in the auto industry, including by Asian producers.

GM said its North American division continues to suffer from soaring health care costs and declining sales of sport utility vehicles. The automaker said it was launching a national advertising campaign on network television, radio, print and other media to promote the incentives. The company announced separate incentives for its Cadillac, Saturn, Saab and Hummer nameplates. He said Cadillac, Saturn and Saab will offer $500 rebates, while Hummer will have special pricing on a rear entertainment system.