By on September 18, 2009

Roll up for the Magical Mystery Hidden Incentive Tour!

We don’t have any numbers yet on GM’s 60 day money-back guarantee, but according to GM dealers speaking to Automotive News [sub] it’s not generating a lot of interest. “If [customers] like the car, if they test drive the car, most of the people would rather have a car to keep,” explains one dealer. Which makes a certain amount of sense, and which is why dealers insist that the number of buyers taking GM up on the offer doesn’t matter. “It’s more important to talk about the money-back guarantee. It conveys confidence in the vehicles,” says another dealer. “It’s not about the deal, but rather it’s about the world-class products.” That sounds good in principle, but the reality is that it actually is all about the deal. Again. Still.

A little known fact about GM’s 60-day money-back guarantee is that you don’t have to take it. If you go that route, GM will give you a $500 cash rebate to waive your right to return the vehicle. And it’s no shocker to learn that this extra cash on the hood is a lot more enticing than the ability to return your vehicle within 60 days. Unfortunately, it also cements the reality that GM is shopped almost exclusively for a deal and that incentives are still the only thing moving the metal.

Considering how corrosive this reality is to GM’s perception-gap-fighting efforts, something has to be done. And so it’s up to dealers to not give consumers what they came for and hide the $500 option as well as they can. “Our salespeople are not permitted to talk about the $500. That is going to be disclosed in the business office,” says one dealer. “For this program to be successful, it’s more important to talk about the money-back guarantee. It conveys confidence in the vehicles.”

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26 Comments on “May the Best $500 on the Hood Win...”


  • avatar

    “Golly gee perfesser, couldn’t they just build world-class quality cars and let the product speak for itself?”

    “Shush boy, the grown ups are busy”.

  • avatar

    Gotta love the tv spot with Ed Whitacre.
    He doesn’t say anything about GM working harder to build Better cars than the crap they’ve been producing for decades, or apologizing for s**ttiness, mea culpa, turning over a new leaf and all that, etc.

    He says that as of present roughly, “Car for car, when compared to the competition, we win. Simple as that.”

    …erm, o-kay; -sure…

    =>So, Lutz has roped this guy into thinking there’s absolutely nothing wrong with GM and the single problem that exists is the fabled Unicorn “Perception Gap”???

  • avatar
    Martin Albright

    Okay, so if the “Money back guarantee” is all about “conveying confidence”, then why does it have an expiration date? Every ad I’ve heard has the typical mumbly-mouth legal disclaimer at the end that says something to the effect of “must take delivery by such-and-such a date.”

    If they were really confident in their product, wouldn’t they be offering this money-back policy from now on?

  • avatar
    Gardiner Westbound

    GM would be better served by a lengthier, honest standard warranty than gimmicks. Nonetheless, the 60-day money back guarantee is good insurance against being saddled with a lemon. Watch out for the squint print!

  • avatar
    brettc

    I remember hearing years ago that Hyundai was going to modify their 10/100000 warranty, and I assumed that would happen eventually because their cars were getting better. But here we are in 2009 and their cars continue to improve yet they still offer the warranty.

    I had a bad experience with a 2001 Accent, but I might buy another Hyundai in the future. I won’t buy a GM product though. I keep hearing about how Hyundai is improving their cars, and that news doesn’t come from Hyundai executives that say it over and over to try and make it true.

    GM still has a craptacular warranty, and their executives are the only ones constantly saying how great their new cars are. Word of mouth from actual consumers helps sell things. A 10/100000 warranty will get people into showrooms because they’ll see that the manufacturer will take care of whatever problems might come up. I was always treated well at Hyundai dealers. And I was always given a nice loaner no matter what the problem was. That’s why I’d potentially buy another one.

    Old white guys going on TV and telling me to shut up and buy their crap aren’t going to sell cars. 60 day return gimmicks aren’t going to do it either. GM needs to make world class vee-hick-ils, have an excellent warranty (how about 11 year/110000 miles?), and stop offering crazy incentives every day of the year. Until then, GM is going to continue its downward spiral.

  • avatar
    highrpm

    See, here’s the problem with the 60 day return policy. Nobody expects to be able to really return their car if they want to without getting hosed.

    GM has had too many warranties, specials, rebates, and policies with a bunch of asterisks at the end. In the end, the customer got hosed whether it was because the part wasn’t covered under warranty, they went over on mileage, the trade-in policy was misleading, or whatever.

    There is only one way for GM to increase sales right now – a 10 year/100k mile warranty. A real, no asterisks and no bull, warranty. Come out and say it in the ads and on print. This is the New GM – our warranty covers everything. No bull.

    Lutz keeps telling me that GM builds great cars. Well prove it. Offer the warranty. If the cars are great, then I won’t be using the warranty and you will have sales.

  • avatar
    Phred_da_Phrog

    “Nonetheless, the 60-day money back guarantee is good insurance against being saddled with a lemon.”

    That’s what the lemon laws are for. They say the dealer has to fix it or give you your money back, at least here in NY. This guarantee is worthless unless you have serious buyer’s remorse. In which case, you shouldn’t have bought it to begin with.

  • avatar
    Blobinski

    When GM realizes that quality begins beyond the Friday morning internal Cost Savings meeting, I may start looking. E. g. the little black plastic ‘Christmas’ trees they use that allow really fast install of door panels, yet fail 2 years later, etc, etc ad nauseum.

    Building a great car is not hard – tear apart the leading vehicles in each class, copy and paste with some GM specific changes, and sell them.

    Somehow they get 80% the way there…look at that new Camaro review…low gearing and a weird steering wheel. This would drive me NUTS. How many people internally drove this car and said “This tranny is perfect and the so is the steering wheel…release for production” This would rarely happen at Honda, Subaru (except stock radios), and Toyota.

    B

  • avatar
    mikey

    Hey B&B,the perception gap is a myth eh?

    Try this, post something positive about GM. I don’t know..something like, “used car guys love the full sized old GMs” or maybe “my buddy got 300K out of a Sunfire”. Or maybe, GM makes the best trucks bar none.

    Come back in an hour,and see the direction the comments go. Then tell me that the perception gap is a myth.

    All of the above statements are true and have been posted here,at one time or another.

  • avatar
    seabrjim

    What are you saying, Mikey?

  • avatar
    PartsUnknown

    This is a gimmick, no more, no less. No different than a Red Tag Sale. The $500 quickie handjob undermines the whole thing anyway, making it about “the deal” rather than superior product. Plus Whitacre comes off smarmy in the ad – not good.

    mikey, I’ve never owned a GM product and don’t know many people who do (honestly), but I can think of two anecdotes:

    “My dad’s brand-new ’82 Malibu wagon literally fell apart within 30K miles. He traded it on a Nissan Stanza which gave 180K miles of reliable service and he’s never looked back”

    “My neighbor bought an ’08 GMC Acadia that was bought back by GM under the Mass. lemon law. It had numerous unfixable problems, including water leaks that led to pervasive mold. He bought a Highlander”

    26 years apart, same dealio. I wish GM well, I really do, but I won’t buy until I see quantifiable long-term quality in their products.

  • avatar
    Martin Albright

    Mikey: I think you’re missing the point. It doesn’t matter if there’s a “perception gap” because most people can’t be guilted or shamed into buying a vehicle, and the whole “perception gap” nonsense is predicated on the assumption that you can.

    You want to talk about “perception gap?” What was Hyundai in the 1980’s? A joke, and not a funny one. A cheap, crappy car for people with no taste. What is Hyundai today? A solid, respectable middle-of-the-road car company.

    How did they get there? With cheesy gimmicks like this “money back guarantee?” By trying to shame people into buying their products? By pissing and moaning about how unfairly they were being treated?

    No, they got there by (1) improving their product and (2) backing it up with an honest-to-God, no BS warranty.

    GM keeps trying these gimmicks like Ralph Kramden or Homer Simpson trying one get-rich-quick scheme after another. It hasn’t worked up to this point, why would it work now?

  • avatar
    Juniper

    Blobinski :
    Building a great car is not hard

    Obviously you have no idea what it takes to design and build complex electro mechanical devices such as cars.
    Your comments insult every person who works for any car company in the world.

  • avatar
    Gardiner Westbound

    That’s what the lemon laws are for. Phred_da_Phrog

    Canada has no lemon laws. Statutory consumer protections are minimal and poorly enforced by self-serving industry insiders.

  • avatar
    gslippy

    It’s unconscionable that they effectively make the consumer ‘buy’ the policy by not offering the $500 if they accept the policy. It’s pretty snakey not to even mention it to the consumer.

    It makes sense to offer $500 as an alternative to a tangible option, such as aggressive financing or nicer wheels. Seems like bad form to show such little confidence in their own cars that the program ends on November 30.

    If I ‘bought’ this guarantee, I’d probably return the car after a little more shopping. Your losses amount to pretty cheap rental.

  • avatar
    Lokkii

    I really wonder exactly what GM can do to build trust and confidence and sales?

    I’ve been pondering this for a while now, while reading about all the things they’re doing wrong.

    What can they do? They build/brought over the G8- but it’s not selling. They built the Camaro which is very popular and getting good reviews but won’t save the company alone.

    What CAN they do? Seriously. They’re not in a financial position to offer a Hyundai 10/100 warranty. They have to (paraphrasing Donald Rumsfeld) “come out of bankruptcy with the products they have”.

    Do you take one model and warranty the gosh-darn out of it?

    I’ve advocated putting a CTS in Times Square with the engine running, doors opening and closing, lights flashing, windows going up and down, for a year to show the durability/reliability of their cars…. but instead we’re racing Bob Lutz.

    Seriously though: what IS the right gesture for GM?

  • avatar
    p00ch

    Mikey,

    A Sunfire might last up to 300K miles, but at what cost in terms of repairs or replaced parts? How many minor items (eg. broken latches, peeling paint) are you willing to live with while getting to 300K? I’m not criticizing GM here, I’m trying to highlight that mechanical lifespan alone isn’t everything to a typical consumer.

  • avatar
    MisterB

    [QUOTE]Gotta love the tv spot with Ed Whitacre.
    He doesn’t say anything about GM working harder to build Better cars than the crap they’ve been producing for decades, or apologizing for s**ttiness, mea culpa, turning over a new leaf and all that, etc.[UNQUOTE]

    [QUOTE]Whitacre comes off smarmy in the ad – not good.[UNQUOTE]

    Whitcare comes across as an old guy that doesn’t know what he is talking about – or doesn’t care.

    Whitacre says their putting “their money” where their mouth is. It’s taxpayer money!

  • avatar
    Martin Albright

    Lokkii:

    What CAN they do? Seriously. They’re not in a financial position to offer a Hyundai 10/100 warranty.

    Think about that for a moment. Warranties are only costly if they are used.

    A warranty that has no claims against it has zero cost to the manufacturer.

    You can’t look at the Hyundai 100k warranty as a one-shot gimmick. In fact, a warranty like that is a money-where-your-mouth-is promise to the consumer, exactly the kind that GM needs to make.

    Bottom line, if GM cars were as good as Whitacre says they are, a 100k warranty wouldn’t hurt them. And if they’re not, then a 100k warranty won’t help them.

  • avatar
    petrolhead85

    Mikey:

    I accept your challenge! I have a 2001 Sunfire that hasn’t cost me so much as a penny in mechanical repairs. All I’ve done is regularly change the oil, new tires and brakes, and I replaced one of the rear turn signal bulbs last week. There’s not even a speck of rust on it and the paint still shines like new. Granted it only has ~95,000 km on it, but I’d still call it a success story.

    As for the article itself, I still don’t see how a 60-day buyers remorse insurance policy is supposed to “convey confidence in the vehicles.” I’ll add my vote for GM to prove that their car really are that good by offering a Hyundai-beating warranty.

  • avatar
    Jeffer

    I would think it more credible if he didn’t claim every GM car is better than the competition. If he believes that he is a fool, if he doesn’t, then it shows contempt for the car-buying public to make such a statement.

  • avatar
    mikey

    Well thanks Petrolhead85, But me thinks that the departure of RF will steal the headlines today.

    TTAC may move a whole different direction,after today.

  • avatar
    texlovera

    Here’s the problem:

    Say GM starts building better cars TOMORROW. And they offer the 10/100,000 warranty. And no one would ever need to use it.

    How long do you think it will take for GM to claw back enough market share to again become viable? And do they have that amount of time available?

    I don’t think they have enough time. And that’s even under a best-case scenario.

    They are screwed.

  • avatar
    rj

    How about consistent quality? For good or ill, it’s a what-have-you-done-for-me-lately world.

    My 2001 Alero was, dollar-for-dollar, the best car I’ve ever owned. Not one major problem with it in nearly 90,000 miles. I had a 1992 Saturn that treated me equally well.

    My 2006 CTS 2.8 was just this side of a POS. The fact that it was a great-looking Cadillac didn’t mask its numerous electronic failures and shoddy interior quality. The best thing I can say about it was that the dealer was incredibly helpful and cooperative every time I brought it in for yet another reboot.

    Now I’m driving a Mazda.

  • avatar
    golden2husky

    When GM realizes that quality begins beyond the Friday morning internal Cost Savings meeting, I may start looking. E. g. the little black plastic ‘Christmas’ trees they use that allow really fast install of door panels, yet fail 2 years later, etc, etc ad nauseum.…

    I never understood the use of those damn Christmas trees on parts that may need to be removed. And it is not just GM who does this…

  • avatar
    rudiger

    texlovera: “How long do you think it will take for GM to claw back enough market share to again become viable? And do they have that amount of time available?

    I don’t think they have enough time. And that’s even under a best-case scenario.”In the last 50 years, (beginning with the cost-saving engineering of the 1960 Corvair rear suspension), GM has consistantly managed to piss away all the trust they’d earned with the American consumer during its first 50 years of existance. There isn’t any kind of short-term marketing gimmick that’s going to change that, certainly nothing as lame as being able to bring back your new, POS GM product within 60 days of purchase.

    It’s worth noting that for most of the 40 of those last 50 years, the company was still hugely profitable. As late as 2000, GM stock traded at an all-time high of $94.62/share. It’s now virtually worthless.

    The sad thing is that all those truly responsible for GM’s steady decline and demise have long since retired or died, one sterling example being none other than the infamous eighties’ financial wizard CEO, Roger Smith.

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