GM's "60-day Buy Back" plan - more gimmicks or smart sales move?

Another "Hail Mary" from GM? Or the real thing?

Starting today and running through November, General Motors is offering buyers of their Core Four brands, Cadillac, Chevrolet, Buick and GMC, a 60-day money-back guarantee on their new car and truck purchases. It's called the "60-day Satisfaction Guarantee."

The campaign marks GM's efforts to rebound after a 39-day bankruptcy and a $50 billion federal bailout. GM, which is shedding half of its US brands (Pontiac, Saturn, Saab, and Hummer) will try to boost their US market share that has fallen to 19.5% this year from a peak of 50.1% in 1962.

It's the second radical marketing move in just a few weeks by GM to try and resurrect consumer confidence in the company since the bankruptcy ended.
Could 60 days in a 2010 Buick LaCrosse convince import-buyers to make Detroit their car-maker of preference?

The first was begun last month in conjunction with online buying service Ebay. In that program, which has had only modest success but will continue for the time being, some 250 GM dealers in California are posting their new-car inventories for California-only buyers, some cars and trucks up for bid in a traditional auction environment, some marked with a no-haggle "buy it now" price.

Here are the details of the new money-back plan:

• Covers Chevrolet, Buick, GMC and Cadillac models for the 2009 and 2010 model years.

• Allows customers to return their cars after 31 days and before 4,000 miles.

• Does not cover leased vehicles.

It's thought this program is the first of its kind for any major car-maker, though it does bear some philosophical resemblance to Chrysler's, "If you can find a better car, buy it!" sales program headed by then-company chief Lee Iacocca in the early 1980s.
This 1984 Chrysler K-car limousine was made during the time of the company's, "If you can find a better car, buy it!" campaign

While the GM campaign will be fronted by the company's new chairman, Ed Whiteacre, former chief of AT&T appointed to the GM post by the Obama Administration, it's thought that Bob Lutz, GM's powerful and outspoken vice-president with strong influence in the corporation's styling, marketing, public relations and advertising, is the "man with the plan" in this case.

We're at a happy stage in the automotive industry where, essentially, in the various price brackets, most things are equal between brands and makes and models.

For instance, the average price of a new car in the US is right around $32,000; driving all the cars in that price bracket will yield a lot of good experiences and very few negatives. Objectively, cars and trucks in each major price bracket reflect most of the same positives and quite few negatives.

Here's what we think of the new GM program:

Apart from price, safety, performance, appearance and fuel mileage, the most important part of the car-buying decision comes from the test drive. Many shoppers make the mistake of being timid during this critical part of the process, often allowing themselves to be "muscled" into driving the car only on certain roads (which will show-off the car's strengths) and for a specific period of time "recommended" by the salesperson.

But if buyers test-drove the new car in their own real-world situations, it would have a huge influence on which car they'd buy. In a very real sense, isn't this what GM is offering potential buyers with this new money-back scheme?
Buick's 2010 LaCrosse could do a lot to convince US buyers that US cars are up to import quality and even in some cases beyond

Even with objective things about the various cars being shopped very similar to most buyers, it's those subjective items --- how the switchgear feels, adjustability of the seats, rear seat room (which most buyers never check), how bright or dim the instrument panel can be made, if reflected sun makes the gauges hard to see in the daytime, if wide A-pillars make front/side vision difficult --- which can turn the buyer one way or another.

I usually drive one or more new cars a week to stay familiar with each car-maker's offerings and be able to answer your questions and make recommendations.

Recently, I spent a week in a 2010 Buick LaCrosse, and even though the early "pilot" model I drove was not off the actual assembly line (so some glitches are expected), this LaCrosse was more than a rival for its target: the Lexus entry-level luxury sedan, ES350.

LaCrosse's fit-and-finish, performance, appearance inside and out and styling are all impressive and even outdo the Lexus on many accounts.
GM used the Lexus ES350 as their target car for the 2010 LaCrosse; they've come close to hitting a bull's eye

Could 60-days-or-less in a LaCrosse convince a die-hard Toyota/Lexus/Asian-only buyer to go with an American car for perhaps the first time in several generations of his or her family?

In my opinion, absolutely.

The only problem, as always, is getting those buyers into GM dealerships in the first place. If Ed Whiteacre, Bob Lutz and what is hopefully a newly-invigorated GM marketing team succeed in that undertaking, they might get that US market share up over 20% again ... at least for a start.

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Comments

[Billy Carter]

I don't trust GM based on first hand experience. I bought a brand new car (TransAm with the LS-1 engine - similar to a Corvette engine) from them and noticed this brand new car used two quarts of oil after one week (500 miles). I immediately let them know and brought the car back. I asked for a replacement car as this car was obviously flawed. There were no oil leaks, I showed them oil residue on the exhaust tips - it was blowing oil past the piston rings. After several additional trips back to the dealer and writing letters to GM, the GM representative called me and said if I paid an additional $3000, they would replace my car (or I can take a "crate" engine - no thanks). I told him I would file a Lemon Law case, which I did and won. At the Lemon Law hearing the New England Regional GM representative said it was normal for a car to use a quart of oil every couple hundred miles. The Arbitration panel found in my favor and forced GM to replace the car.

The GM representative lied to the panel and claimed I did not give GM enough "repair attempts", however my documentation proved otherwise the panel found I fulfilled my obligations under the program.

My question is: Why would anyone trust GM to take a car back within 60 days or value a longer warranty when GM skirts honoring the warranties they offer today/in the

[Sinclair]

I'm afraid that this 60-day buy back program is more of a gimmick than a really helpful sales move. It will probably generate some badly-needed sales, but at the risk of alienating even more customers in the long term. If the car turns out to be a lemon down the road, and out of its warranty period, the customer will end up feeling even more resentful and taken advantage of.

GM really needs to take a lesson from Hyundai. Facing a sales slump in the 1990s, the deserved result of a history of horribly unreliable products, Hyundai not only went to work improving the reliability of their products, they offered those same products with a terrific 10-year 100,000 mile TRANSFERRABLE warranty.

Until GM can offer a solid reputation for reliability they needs to stand behind their products the way that Hyundai did until their reputation improved. At this point in time I don't think buyers should be willing to take a chance on the reliability of what, for most buyers, is the second largest purchase behind their house that most people ever make.

[Steve Parker - Huffpost Blogger]

All good points.
The problem for GM with such a 10-year warranty (they currently offer a 5-year/100,000 mile transferable powertrain warranty on new cars) is the cost --- I don't think GM could afford such a plan now and in any event they'd probably have to get permission from Washington, DC for a plan like that.
Hyundai had (and has) plenty of cash and made the decision to stay in the US market no matter what it cost them. The 10-year deal definitely cost them, and big, initially, but as the quality of their cars has improved, their warranty costs have gone down.
It makes sense for GM to ballyhoo an interesting, exciting guarantee on the front end of ownership rather than 10 years down the line, where costs to the company could be huge.
Steve