Auomotive News reported on September 10, 2009
DETROIT — General Motors Co., seeking to win the trust of American consumers after its U.S.-funded bailout, will offer a 60-day money-back guarantee on its vehicles.
The deal will be part of an advertising campaign led by the automaker’s new chairman, Ed Whitacre. In an echo of Lee Iacocca’s “If you can find a better car, buy it” charge to Chrysler Corp. customers in the early 1980s, the GM commercials will say, “May the best car win.”
The program runs from Monday, Sept. 14, through November.
“We’re putting our money down that if people buy one of our vehicles and don’t absolutely love it, we’ll take it back,” Bob Lutz, GM’s vice chairman of marketing, said in a statement.
The campaign marks GM’s efforts to rebound after a 39-day, U.S.-steered bankruptcy and a $50 billion federal bailout. GM, which is shedding half of its U.S. brands, will try to boost a U.S. market share that has fallen to 19.5 percent this year from a peak of 50.1 percent in 1962.
Reduced dealer discount
In conjunction with its stepped-up marketing effort, GM will cut the U.S. dealer discount made on new vehicle sales by half a percentage point, Reuters reported, citing sources who asked not to be named because the plans are not yet public.
The dealer discount is the difference between the wholesale price and the sticker price, expressed as a percentage of the sticker price.
Elements of the new advertising campaign have been reported previously, but it was not clear how GM would offset the tens of millions of dollars the new effort is expected to add to its marketing costs.
GM’s North American sales chief, Mark LaNeve, told dealers that although the changes will reduce the discount, they should expect a higher volume of sales in 2010 as the U.S. market recovers, and particularly since there are fewer GM dealers.
GM spokesman John McDonald said the goal to shift to a smaller number of dealers with higher sales per outlet remains unchanged.
“The key is to have a higher-performing dealer body,” he said. “We expect dealers to step up to the plate to improve profitability.”
Dealer skepticsm
One person briefed on the plan told Reuters it was met with some skepticism from dealers at a recent meeting with GM executives.
“Some of these guys feel like they haven’t seen the ball since kickoff,” the person said. “Their response to the talk of higher sales is, ‘How many times have you told us that?’”
GM’s sales have fallen 35 percent in its home market through August.
To counter U.S. consumer perceptions that the automaker’s brands lag on quality and reliability, GM has been readying an ad campaign focused on its mass-market Chevrolet brand and featuring direct comparisons to offerings from its rivals, executives have said.
The plan announced today:
• 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.
“Three or four years ago, this would have been a huge risk,” Lutz said during a conference call. “We are now so confident of our vehicles, we can afford to take this risk.”
Reuters contributed to this report