C8 Corvette: A General Motors Marketing Technique

As it stands, a brand new Corvette C8 starts at $59,995 USD, so how can General Motors be making a profit on these? Well the simple answer is... they're not.

36w ago

29.1K

Hitting the headlines around the world earlier this year, the Chevrolet Corvette C8, with a bold starting price of under $59,995 USD. Ditching a traditional Corvette front-engined layout for completely new platform, this new Corvette is a mid-engined supercar with a sub-3-second 0-100km/h sprint, and a price tag of under $60k USD. How could this be possible?

Well, the performance is true. The price tag is true. And yes, the car is real. For the first year of production, the C8 Corvette will have a base price of $59,995 USD.

A source from General Motors revealed that every Corvette C8 sold at that base price will be making a loss for the company, so prices must increase for the C8 Corvette in following years to make a profit. A clever marketing technique. Let us expand.

If you've ever studied marketing, you'd know what a 'loss-leader' is. For those that don't, a loss-leader is a marketing technique in which a product is sold at a loss to attract media attention, influence and customers; and since the C8 Corvette is a low-volume production car, that makes it the perfect car for General Motors to make an initial sacrifice on.

With the current pricing of a C8 Corvette; even optioned up, a rough estimate could predict that for the first year of production, Chevrolet will make quite a substantial loss... Enough of a loss for GM to reveal that prices would have to go "through the roof" to cover the losses. Initial pricing for the C8 Corvette project was to be $79,995, which would be expected, albeit still very well priced considering the high development costs for a mid-engined car running a completely new platform. With all this in account, you bet that GM is hoping most first-year Corvette buyers are optioning them up; as fully optioned - the price reaches just under $104k USD, a significant jump from it's base price.

This isn't the first time General Motors has manipulated pricing for use as a marketing technique. A similar strategy was put into practice with the initial release of the C7 Corvette, as prices rose by $2,000 per year for the next consecutive two years - and for a while now, Chevrolet has been targeting Ford Mustang owners with incentives and discounts to 'switch' to a Camaro, such as a $3,000 rebate to all Mustang owners if they purchased a Camaro in october.

So have Chevrolet succeded in their loss-leader marketing strategy?

Lets put it this way, we expect that at some point in time, you've had a conversation with your friends about how much car a C8 Corvette is for the money.

AutoNews Australia

Join In

Comments (9)

  • Unless you custom order a “bare bones” c8 (and they are seriously bare bones with no options) all the dealer showroom models are stacked with options. Im looking into ordering one and the options list is ridiculously huge.

      8 months ago
  • Well the Corvette has never been a money maker. While Chevy does not want to lose money on it, it’s job is not to make money on its own. It’s a prestige car for them and people come in to look at it, maybe test drive it but buy a Malibu or a Tahoe. It also is a test bed for technology and a racing platform. All publicity for the brand.

    That’s the real reason the Corvette exists.

    And the C8 is delivering lots of “free” publicity, as well as being a fine sports car.

      8 months ago
  • They can make a profit, because every other manufacturer is overcharging. Especially most of those European manufacturers.

      8 months ago
  • "If you've ever studied marketing, you'd know what a 'loss-leader' is. For those that don't, a loss-leader is a marketing technique in which a product is sold at a loss to attract media attention, influence and customers;"

    Well, it's been aeons since I studied marketing fundamentals but I should perhaps point out that 'loss leader' isn't a strategy to sell a product below cost, but merely at a lower profit margin than the competition. The 'loss' part doesn't mean making a loss but losing against the competition - the product could still be turning a profit. It is true, as you said, although very rarely, that certain products are priced below cost, in the case of cars as 'poverty spec', for the sole purpose of attracting customers into the showroom with the intention of selling a more extensively specified version or another car altogether with a higher profit margin. However, I would be surprised if the C8 costs $60k to build given there's nothing fundamentally groundbreaking or newly researched tech that would have cost billions in R&D.

      8 months ago
  • Good to know, always looking out for deals. Z51 with comp seats please

      8 months ago
Loading...
Loading...
9