GM cuts prices while USPS increases postage

Bloomberg.com is reporting that GM is lowering the price on 80% of their vehicles in an effort to increase sales:

Jan. 10 (Bloomberg) -- General Motors Corp., whose U.S. sales fell 4.3 percent last year, said it will cut the prices on about 80 percent of its cars and trucks.

Prices will reduced on all Buick, Chevrolet and GMC models and most Pontiac vehicles, said Mark LaNeve, GM's head of North American marketing, in a statement today. The price cuts take effect tomorrow. Combined with reductions made on some models in August, the changes cover 90 percent of GM's volume, LaNeve said.

GM Chief Executive Officer Rick Wagoner said two days ago that GM may improve U.S. sales this year on the strength of new vehicles such as its redesigned large sport-utility vehicles. GM, the world's largest automaker, lost $4.8 billion in North America last year. Its 26.2 percent U.S. market share in 2005 was the lowest in 80 years as Toyota Motor Corp. and other Asian automakers gained a record 36.5 percent share.

``It's a good idea, but it may not be big enough and it will probably take three to four months to gain traction because it's a slow time right now for sales,'' said Art Spinella, president of CNW Marketing, an auto consulting and research firm in Bandon, Oregon.

Contrast GM with the USPS who just raised postage rates by 2 cents.

It's an excellent lesson to see how free enterprise raises capital compared to how governments raise money, generally speaking.

GM will make cutbacks and theoretically lower operating costs while selling more cars because the prices have been reduced. The US Postal Service won't make cutbacks or try to lower their operating costs and to increase revenues they increase rates.

That's what happens in a world without competition.