General Motors is trying to convince customers to try out its Chevy brand by treating its cars like other retailers treat T-shirts and pajamas -- by letting new buyers return a product if they're not happy with it.
But a customer will need more than just a receipt when returning a car. A host of restrictions apply: A family can't return a car if the buyer dies; the vehicles must come back clean, undamaged and with less than 4,000 miles on it. So the process won't be that simple. Yet the folks at Chevy are hoping the return promise will lure customers to the showrooms, where they will then fall in love with the cars.
"Customers respond positively to the confidence companies demonstrate with programs like this and appreciate the peace of mind that comes with knowing they have the option of being able to return their vehicle,” said Chris Perry, Chevy's global vice president of marketing, in a press release.
At the same time, Chevy will offer its 2012 models with haggle-free pricing, giving all consumers the same price for each model. Haggle-free pricing has at times led to big bumps in sales because many consumers hate to negotiate car prices. In the summer of 2008, GM offered "employee pricing for everyone," a sales tactic that led to a big jump in sales that season.
But eventually such gimmicks wear off, it seems. GM tried the same program the following summer -- to little effect.
Despite improvements in reliability and quality, GM products still suffer from perception problems on the East and West coasts, where cars made by foreign automakers are preferred. The automaker has offered similar incentives in the past in an attempt to woo new customers, who wouldn't otherwise consider a Chevy purchase, but those buyback programs only allowed car returns after a job loss or illness.
This kind of insurance program was developed by Joel Ewanick, now GM's global marketing chief, when he headed Hyundai's marketing. The South Korean automaker launched its buyback program in 2008 (when the economy started to tank) and offered to take back cars if owners lost their jobs. Called Hyundai Assurance, the marketing program helped Hyundai become one of the few automakers to experience an uptick in sales that year.
Hyundai ended the program in late 2011, saying consumers had lost interest. Only 350 customers participated in the program, according to a Hyundai spokesman.
These types of programs appeal to automakers because their risk is limited in certain ways. Buyers are often required to opt out of taking a cash rebate. That gives an automaker a bit of a financial cushion: Instead of having to grant a new buyer some $2,000 in rebates, the automaker holds on to that sum, which will then cover the depreciation cost on the vehicle should it be returned.
"It is a smart and cost-effective program that will work towards diminishing the perception gap of the Chevrolet brand," said Jesse Toprak, vice president of market intelligence for TrueCar.com. "Similar programs have been quite successful in the past, and we expect Chevrolet to get a decent boost from this promotion."