By on March 31, 2009

GM is still trying to bean count their way out of this mess. But, thankfully, they’re using better quality beans. The powers that be (or were in this case) have designed a new program that affords customers the opportunity to once again become conspicuous consumers of GM products. Two of these items are old hat. The 5-year/100,000-mile warranty is now, get this, a 5-year/100,000-mile warranty. Did we mention GM has a rather large PR department? You also can get one year of OnStar which, again, isn’t newsworthy. But there are a couple of interesting additions designed to minimize the “fear factor” of making a dumb car buying decision.

GM will now offer what Hyundai offers when it comes to automotive unemployment insurance. Buyers will get up to $500 per month in payments for their financed ride if they lose their job. It’s good for up to nine months. The unfortunate soul in question will have to qualify for unemployment benefits. I personally wonder how many of GM’s own employees will take advantage of this offer given the new economic realities.

The second one is a really sticky wicket. GM has created a “Value Protection Program” that will guarantee trade-in prices at the “clean NADA retail value.” This one takes major courage because NADA retail values tend to be overinflated. Only banks with sub-prime tendencies and overtly optimistic new car dealers (with equally gullible buyers) will take these types of valuations seriously. On the other hand, what else does GM have at this point? Inventory. Months and months of inventory. Let the paying of Peter, to finance Paul, for the detriment of all the taxpayer Mary’s out there, begin.

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29 Comments on “GM: Total Confidence?...”


  • avatar
    26theone

    ?? or you could just buy a Toyota and be done with it.

  • avatar
    wytshus

    If they want to move metal, they should offer 2 cars for the price of one. One to drive and one to keep in the garage for parts…..

  • avatar
    1996MEdition

    A turd is still a turd….

  • avatar
    Stingray

    They could “convince” the NADA to drive prices lower… or nearer reality. ;)

    I think Obama should give soft credits to:

    People that has problem with mortgages. Maybe buying it, so people pays the “government”
    Purchase domestic branded cars.

    He can also embark into an extensive public works program, which would require, you guessed it, the use of US built/made materials, machinery, etc…

    This would have a better effect on the economy than bailouts.

  • avatar
    Stein X Leikanger

    GM’s problem isn’t that they can’t build great cars, but that they can’t afford to. If they are to dig themselves out of the gigantic hole in the ground Rick dug, they have to skimp and scratch and claw every step of the way.
    They’re not alone in that, but they are in the most trouble. Which means that you’ll be subsidizing their “return to greatness.” Why you’d want to do that is beyond me – given that there are other offerings out there.
    I’m pretty certain that the reason Wagoner walked the plank were the coming March numbers. There was no way GM could keep up the charade that underpinned the first round of bailout dollars (they actually stated they’d be making money by now.)

    It’s over for GM as far as consumer confidence is concerned – and that’s what should bother them the most.

  • avatar

    The question is, what took them so long? Hyundai’s rebadged Walkaway Insurance plan was/is a roaring success. Today, Ford announced the same. GM came in third, but only after poo-pooing the idea a few weeks ago.

    The guaranteed trade-in is a gutsy move, it will sell cars and buy customer loyalty. At what price is another question.

  • avatar
    Edward Niedermeyer

    Jalopnik is reporting that the GM “Total Confidence” website doesn’t work. Ouch.

    Irony 1, GM 0.

  • avatar
    rochskier

    Corvette plant shutdowns scheduled through July:
    http://www.courier-journal.com/article/20090330/BUSINESS/90330025/-1/nletter02?source=nletter-business

    Looks like total confidence to me!

  • avatar

    You’ve misread the “Value Protection,” Steven. Understandable, since they don’t clearly explain it.

    Here’s how it works: if you trade the car for another GM vehicle, after making at least half the payments, they’ll pay you the difference between what you owe and clean NADA retail.

    Not worth much because:

    1. After making the payments, you’re less likely to be upside down.

    2. The gap between actual trade-in value and “clean NADA retail” is likely much larger than that between the latter and what you owe. Especially given #1.

    My take:

    http://www.truedelta.com/blog/?p=354

  • avatar

    And one more difference between GM’s and Ford’s plans and Hyundais: only with the last can you return the car. Hyundai provides “Value Protection” in the first year, when it’s more likely to be worth real money.

  • avatar
    RedStapler

    Guaranteed trade-in can kill you if the projected values are high.

    In the mid to late 90s Freightliner turbocharged sales of semis to large fleets with optimistic guaranteed residual values. When the chickens came home to roost during the 2002-2003 downturn they had a large right down. CEO of Trucks in North America was sacked by Stuttgart. They actually had to re manufacture the glut of used sleeper tractors into more desirable day cab models.

  • avatar
    jpc0067

    What B-school/genius evangelizes/discovered that the best times to take chances are when economic times are at their worst?

    If they have to take them back, they CPO them or sell them to rental agencies. Short term, they have to move them off the lots to keep the lines going. Long term, they could have a problem, but the car market way low…there is some demand backlog.

    Ford shoulda done this weeks ago, when the Hyundai numbers were in. If they had this plan and even a premature Fiesta ready to buy in the U.S., I swear I’d be driving it. Or I could buy a Focus and trade for a Fiesta next year, according to Michael?

  • avatar
    Hippo

    That is all gone with BK in 60 days, except the government guaranteed warranty. Have fun as unsecured creditor and good luck getting that work done by the remaining disgruntled dealer workers that are sloppy at their best.

    Only way I can see buying a GM or Chrysler vehicle is by people that intent to default in a month or two anyway, as presumably in BK chaos might let them keep the vehicle a little longer.

    Just imagine the assembly quality at plants where they know they will lose their jobs. More like sabotage. LOL.

  • avatar

    Again, this is NOT “guaranteed trade in.” It only covers the difference between loan payoff and clean NADA retail. And it only applies if you’ve made half of your payments.

    The difference between “clean NADA retail” and actual trade-in is what, Steven? Often over two grand? You’re still out that money, plus all you’ve paid so far for the car.

    This only guarantees that you won’t be liable for more than clean NADA retail after half the payements have been made.

  • avatar

    If they want to move metal, they should offer 2 cars for the price of one. One to drive and one to keep in the garage for parts…..

    Given my wife’s POS Buick, one would need TWO for parts.

    John

  • avatar
    A is A

    Jalopnik is reporting that the GM “Total Confidence” website doesn’t work. Ouch.

    Irony 1, GM 0.

    It is true. The link does not work.

    GM never stops to amaze me. Last week I learnt about the Dex-Cool debacle.

    If you click here…

    http://www.gm.com/corporate/about/

    …you will learn that “General Motors Corp. (NYSE: GM), one of the world’s largest automakers”…they do not have the stomach to say they are the second world automaker.

  • avatar
    psarhjinian

    The question is, what took them so long?

    One, Hyundai’s program is potentially more expensive (well, if you discount the sales it’s generating). Two, GM didn’t event it, therefore it’s not worth their time.

    What’s happened with Hyundai (image improvement, warranty performance, pricing consistency) should have been a huge, shining example of what GM, Ford and Chrysler ought to have done to win back consumer confidence.

    That they didn’t do it, and didn’t see the need to, is a large part of why they are where they are.

  • avatar
    tcwarnke

    Steven,

    GM employees are not eligible for this program.

  • avatar
    Happy_Endings

    Looks like Saabs aren’t eligible for the program.

    Also, keep in mind the date this program is starting…

  • avatar
    Cicero

    Why don’t the feds just issue each taxpayer a GM or Chrysler car and make it illegal to buy the one that you would actually want. GM and Chrysler would clear their bloated inventories in a few weeks and boom times would follow.

    If this principle works for nationalized health care (cough), it should work just as well for cars.

  • avatar
    bjcpdx

    As sorry as I might feel for anyone who has both lost their job and owns a GM vehicle, the fact remains that one of those unfortunate circumstances was of their own making.

  • avatar
    no_slushbox

    Michael Karesh:

    Good catch.

    What Michael Karesh is saying is that:

    If you have an Escalade, have a 72 month loan, AND have made more than 36 payments (more than half the payments), then if you still owe $25,000, the NADA retail value is $23,000, and the dealer offers you a trade-in price of $15,000, AND you buy another GM, then GM will give you $2,000 ($25,000 – $23,000), even though you are getting $10,000 less than what you owe on the trade-in ($25,000 – $15,000).

    This is actually quite brilliant on GM’s behalf, since people have to buy another GM to qualify.

    After customers learn how much GM misled them with the “Value Protection Program” there is no way they will buy another GM.

  • avatar

    Why don’t the feds just issue each taxpayer a GM or Chrysler car and make it illegal to buy the one that you would actually want. GM and Chrysler would clear their bloated inventories in a few weeks and boom times would follow.

    Or why not make the next stimulus payment in “car stamps” only redeemable at Gummint Motors and Cry-slur.

    John

  • avatar
    HarveyBirdman

    Michael Karesh and no_slushbox are right on target. (The best evidence that GM isn’t just going to make up the difference between trade-in and NADA retail is the fact that the program is being run through ServicePlan, a third-party insurer.) It seems like GM’s only chance to get sales out of this new promotion is for dealers to (intentionally or not) bungle explanations of this contorted plan when completing a sale. I imagine when the program participants start trying to cash in on the deal in a few years, there’s going to be more than a few upset GM owners.

    And by the way, Michael, I liked your comparison of the three guarantee programs over on TrueDelta. Just one correction needs to be made: You can actually get up to $2500 to cover the gap between NADA clean retail and your loan balance if you sell the car to a private party (compared to the $5000 available on a trade-in). The full details are spelled out on the now-functional Total Confidence website, though I don’t have the stomach to read through all the Terms and Conditions since I write and edit crap like that for a living. *sigh*

  • avatar
    Edward Niedermeyer

    Good news, everyone! The website actually works now! Total Confidence!

  • avatar
    wsn

    Cicero :
    March 31st, 2009 at 12:43 pm

    Why don’t the feds just issue each taxpayer a GM or Chrysler car and make it illegal to buy the one that you would actually want. GM and Chrysler would clear their bloated inventories in a few weeks and boom times would follow.

    ————————————————
    They don’t because then people would realize it’s outright trade protectionism.

    Ok, ok, plenty of people whose IQ is over 80 realized that already. But you see, if the fed indeed does what you suggested, those with an IQ between 50 and 80 would realize that fact too… Give the context of global trade, don’t you think the fewer people realizing that the better?

  • avatar
    Habibi

    At least with Ford and GM you can keep the car for 9 – 12 months while you try to find another job (good luck with that!). With Hyundai you make payments or end up with no job and no car. Now it’s even tougher to get a job. Goodbye frying pan, hello fire……

  • avatar
    obbop

    The feds should allow that 10 percent hand-out (up to 8K$ max) given to house buyers to those losing their homes to buy a Big 3, 2.8, 2.1, 2.009, whatever, van or truck so the newly homeless can live in that vice a tent, cardboard box, whatever.

  • avatar
    vento97

    The title of this blog should be:

    GM – Total Incompetence…

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