Do the auto discounts by the big 3 make sense?

By now we are inundated by commercials from Ford, GM and Chrysler dealers hyping up their new promotions offering employee discount pricing to everyone. The move, first by GM, then Chrysler and finally Ford, has definitely helped sales for all 3 companies, especially GM. It also has helped move excess inventory of 05 models, which is also good, since they would have to discount them more later to move them when the 06 models arrive shortly. However, I wonder how much these discounts really help the bottom line of these companies. Undoubtedly they are good for sales now, but those sales come at a considerably reduced profit margin, which is especially an issue for GM. Also, while the Big 3 have had great sales, companies like Honda, Toyota and Nissan are doing well without the discounts. Toyota had its best June ever this year, and that is while up against the big 3 and their discounts. It was no where near GM's increase, but they can sustain it month after month without gimmicks and discounts where as GM will see its sales plummet once the discount is over.

One often overlooked fact of these promotions is that while they may lure some people away from buying a used car because the new cars/trucks are not much more expensive, in many cases people are just buying a car now to take advantage of the great price instead of buying a car six months or a year from now. While this helps a great deal in the short term, and it may be enough to make this years numbers look good, they likely will give a good chunk of that big in later months and even the following year.

The cold, hard facts here are that the Big 3 have to heavily discount their vehicles to move them, while companies like Honda and Toyota offer either no rebates or fairly small ones on their comparable vehicles. They don't have to do that to move their vehicles. Until the Big 3 can fix that (if they can), they will continue to lose market share.