Three years ago I suggested that Detroit win back car buyers by doing something no one seemed to be doing: provide customer care deserving of the name. In a similar vein, Steve Lang recently asked readers whether manufacturers or the government should do more when a model commonly suffers from an expensive problem. Well, according to an article in Automotive News this week GM has strongly encouraged its dealers to pick up the tab on more out-of-warranty repairs to reward and create loyalty.
According to the article, the bottleneck hasn’t been GM—the customer care money has been there, but dealers have been too tight with it because of fears that GM would punish them if they spent it. Why did dealers have these fears in the first place? The article doesn’t say. The important thing isn’t how these fears came to exist, but that they’re currently unwarranted. One dealer calls the new “open pocketbook” approach to keeping customers happy a “seismic shift.” Problem solved?
Not so fast. Steve and I identified the problem: people are worried about having to pay big money because of faulty engineering or manufacturing on the part of the manufacturer. The solution I proposed: clearly state that repair costs will be covered whenever a problem reaches a certain threshold. I suggested two such thresholds, 10 percent before 100,000 miles and 20 percent before 120,000 miles (which is how far most people seem to now expect a car to go without expensive repairs). The specifics aren’t critical. They can be sorted out by market researchers and actuaries based on how common a problem has to become before it achieve “they all do that” status. (My latest, not yet expensive personal example: the aluminum hood on my 40,000-mile 2008 Ford Taurus X is corroding. I drop by the Ford dealer, and it turns out “they all do that, Expeditions too. To help we’ll refinish it at cost, $300.”) The key condition: the manufacturer would provide owners with complete confidence that they wouldn’t be stuck with the cost of fixing expensive common problems.
GM’s latest policy does not do this. Instead, it seems very similar to “customer care” as it has existed for years, though possibly with better odds. As before, it’s up to the dealer to decide whether or not a particular customer deserves the care. Didn’t buy the car new from them, or didn’t have all maintenance performed in their shop? Then you might be no more likely to receive “assistance” than you were before. This is what the article means about “rewarding loyalty.” The flipside is “punishing disloyalty.”
Nowhere does it say that GM is providing the care because they made a mistake at any point. In fact, the article strongly implies the opposite. Two cases are described. In one, a Chevrolet dealer covered the cost of replacing the door hinge on a ten-year-old pickup with 317,000 miles. In the other, the dealer picked up the cost of fixing a wheel that had suffered damage from an impact. These two cases share critical similarities, probably not by happenstance. In both GM was clearly NOT at fault. GM made no mistake. In both cases no reasonable customer would expect GM to pay for anything. GM did them a favor. Later they can return the favor by buying another GM car from this dealer.
Not mentioned: the Saturn VUE owners highlighted yesterday. Or, to give a more recent example, the Lambda crossover owners that have had to deal with persistent water leaks (though, to GM’s credit, it has bought back many affected vehicles). The problem Steve and I raised—common expensive repairs due to a fault in how the car was engineered or manufactured—is ignored. Addressing this problem would require that GM admit that it occasionally makes mistakes. And, for legal or other reasons, it’s still not willing to do this. No car manufacturer is.
I can see how the new policy, since it intensifies the traditional “you scratch my back, I’ll scratch your back” game, might further encourage people to get all of their service work done at dealerships. And it might help GM retain some existing customers who would otherwise defect to the manufacturer. But it won’t do much to help GM gain new customers. People who aren’t on close terms with a dealer have every reason to remain as wary of GM (and other manufacturers) as they have been. Without a clearly stated out-of-warranty assistance policy, one that doesn’t rely on the dealer to arbitrarily decide on a case-by-case basis who gets help and who does not, car owners could, and likely will, continue to get badly burned by the thousands.