GM Will Launch 60-Day Money-Back Guarantee Program

The automaker tries to make the nervous less so…

By Brendan Moore

09.11.2009

GM logo smallFed up and impatient with the reluctance of the US public to even put their cars on their shopping list, General Motors is kicking off a program that will allow any buyer of a GM vehicle in the United States to return it within 60 days of purchase if the purchaser is unhappy with the vehicle for any reason.

The program kicks off on Monday, September 14, and will last until the end of November. Of course, if it is successful, there is a good chance it will be extended, but the plan at this point is to end the promotion November 30.

Prominent among the many ads that are planned to promote the program is an ad that features Ed Whitacre, GM’s new CEO. In the ad, Whitacre reflects on the fact that when he took the job as head of GM, he himself had doubts about the quality of GM’s vehicles and the company behind those cars, and, that he knows consumers have those same doubts. He then issues an invitation to try a GM car, with the guarantee that it can be returned within 60 days if the consumer decides they don’t like the vehicle, with no questions asked.

The obvious comparison cannot be ignored – the now-iconic advertisements featuring Lee Iacocca, CEO of Chrysler when it was on its deathbed, telling consumers some variation of, “if you can find a better car, buy it”. Bob Lutz, head of marketing for GM, remembers those ads well, and also remembers the galvanizing effect the commercials had on sales. Chrysler pulled out of its death spiral and lived to fight another day.

Will the GM commercial featuring Whitacre perform the same magic? Can lightning strike twice with this approach?

Well, probably not. And, it is doubtful that Lutz thinks that this will happen, either. These are much different times, and there are many more shadings to the opinions American consumers have about American cars and GM cars in particular. The commercial with Whitacre is just one salvo in the battle against the negative customer perceptions about GM, it is not the marketing atom bomb that will wipe out the prejudice against domestic cars widely shared by parts of the American public that has taken decades to develop.

So, the broader question is, “will the campaign as a whole be effective?”

Hmmm. GM says itself that they have no forecast on how many people will buy a car as a result of the campaign, only that they expect a return rate of around 2-3%. That return rate, by the way, is based on the return rate Vauxhall (GM’s British subsidiary) experienced in a similar program years ago.

So, that is a good way to keep expectations low – useful if the campaign does nothing (the vague “we met our goals” gets trotted out), and equally handy if the campaign is a success (“the campaign has exceeded even our most optimistic projections”).

My thoughts are that I think this will be a good (and effective) brand-building exercise, but I don’t think it will move the needle much on actual sales in the short term.

But, you have to believe it was pitched, however, as accomplishing the exact opposite – it must have been pitched as a short-term sales tonic, and, oh, by the way, it’s a great brand-builder as well.

I disagree with that premise. I think it’s a good campaign, but I don’t see it pushing big numbers in terms of units sold in the next 180 days.

Yes, I know the program is supposed to end November 30, which is not 180 days away, but there is another 60-day “tail” after that in which consumers can return the car, so let’s round up to 180 days, which is when we’ll know how many units stayed in the sold column.

All that said, it’s still the type of marketing that needs to be done at GM, and the long-term effect cannot help but be positive. If GM also gets a short-term bump in sales out of it, then more power to them. And, really, just what is the downside here? There is none.

New vehicle sales are down 28% this year compared to last year; GM’s sales are down 35% from the same period last year, and that certainly is not a positive sign. But, it is worth noting that, except for Chrysler, the other competitors in this down market did not have the specter of imminent bankruptcy hanging over them at the start of the year. That tends to dampen public enthusiasm for buying your big-ticket item.

Regardless, GM has no real downside to trying this gambit, and quite a bit of potential upside from a long-term perspective. I just don’t think it will do much for them short-term. GM’s problems in the area of how the public perceives their cars are deep-rooted and pervasive – it is going to take many years of great product to turn that current negative perception around.

GM plans to start advertising the program the day before it kicks off, on the Sunday sports shows.

Here are the terms of the program for consumers, as they are known to us now:

The vehicle must have been sold as a new 2009 or 2010 Buick, Cadillac, Chevrolet or GMC.

It must show 4,000 miles or less on the odometer.

The vehicle must be returned to the dealer between 31 and 60 days from date shown on purchase agreement.

If financed, the buyer can’t be behind in payments on the vehicle.

If the purchase loan included an additional amount to pay off the loan on a trade-in that was more than what the trade-in was actually worth, that portion of the trade-in allowance that was financed won’t be refunded. In other words, if you were upside-down in your trade-in, and the dealer rolled that amount over into the new loan in order to get you out of the trade-in and pay off the loan on that trade, you won’t be getting that amount back from GM, because that was never part of their new car’s price to begin with.

General Motors says more information about the program will posted this upcoming Sunday at www.gm/guarantee and you might want to check there first if you’re interested in taking GM up on their offer.

COPYRIGHT Autosavant – All Rights Reserved

Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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12 Comments

  1. I’m not a buyer for a GM car, but you have to give them some props.

    That’s a very long test drive. No matter who makes the car, lots of things could happen in 30 or 45 days.

  2. One other thing. If you pull up to the service department for some kind of adjustment to your new car during that initial 60 day period, I bet you get pushed to the front of the line.

  3. I just followed the link that is in this post to the other article GM’s Long Road Ahead, which is very perceptive. Even if it was written in 2007, it is true at this time and is the explanation why people are not going to jump at GM’s buy-back offer.

    Sorry to keep commenting on this, I’ll stop now. I am a bit compulsive.

  4. But you would still be out the taxes, registration, etc.

  5. You know people are tired, tired of being lied to, tired of buying things that don’t fill the lies that they were told it would do, tired of being promised that they will be there for you, tired of the goverment bs, tired tired tired so I think this will just be some more tired lies from some corporate thought up crap and make sure you read the fine print????

  6. not intrested, even with the offer, but seems like a good deel

  7. I think it’s a great idea, great marketing, and it’s about time. They need to get the message out about their cars.

  8. I don’t know, I think GM will get some sales out of it during the program. Sure can’t hurt and it needs to be said.

  9. It would be interesting to know which cars have the highest return rate. My bet would be Aveo and Impala.

  10. I just wonder if we’ll be able to get the numbers in terms of how many take the offer, the returns, etc.

    I have a feeling we’ll only get the numbers if it’s successful, and if not, no data, the program just won’t be extended.

  11. Consumers will not be fooled.

  12. I saw the ad with the CEO. Meh. It’s okay, but if that’s the best they have to launch with, then I think they’re going to be disappointed with the results of the ad campaign.

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