OK, so, was GM’s 60-day guarantee program a success or another California eBay-style unacknowledged flop? Here are the facts, according to failed Car Czar and current Marketing Maven Maximum Bob Lutz [via Automotive News, sub]: “GM has sold about 150,000 vehicles since the program began. Of that, just over 100 customers have opted to take a 60-day money-back guarantee, Lutz said. The rest turned down that option and instead took a $500 cash incentive. ‘Out of hundreds of thousands, the people who’ve selected the 60-day guarantee were in the hundreds,’ GM’s marketing chief said during a media event here today. ‘We have had one substantiated return of a vehicle.’” So less than one percent opted for the money-back guarantee. Flop. BUT only one percent of the one percent went on to return a vehicle. (A buyer who regretted opting for an autobox ‘Vette instead of the stick, apparently.) Success! So . . . a successful flop?
Who cares? Not Lutz. The nationalized automaker’s main marketing man is already re-re-focusing his attention on the last next big thing. Here’s the man of maximum himself, reaffirming GM’s unique, unswerving and unshakable combination of ADD and self-delusion.
“The new advertising campaign, “May the Best Car Win,” is intended to compare GM vehicles against the best of the competition to show that the automaker’s products are better in all areas and value-priced, he said.
“We now can comfortably encourage the public to come take a close look at our products,” Lutz said. “It’s to shock Americans into the reality of GM’s products.”
Yeah, well, the real shock will come when taxpayers wake-up to the fact that GM is dead. Again. Still.
It was a success if it sold cars. It would have been a flop if a ton of people returned them. It definitely wasn’t a flop. Insignificant at worst, a mild success at best.
I figured few people would opt for the guarantee, but didn’t think it would be less than 1/10 of a percent.
You completely misunderstand the program Farago.
It would have been a flop if a huge number of people returned their cars. Because they didn’t, the program is a success, not a flop.
Great optimism from our beloved Robert. GM taking a greater than usual pounding here at TTAC. Today’s special is BBQ’d Buick with your choice of LaNeve salad or Lutz potatos!
Blue is my favorite color… but that picture’s hideous enough to make me change my mind.
I wonder how many of those returned cars were intentionally purchased for that reason? Mooches love free stuff, even if it’s only temporary.
Nevermind the bluish tint…seems like GM figured one surefire way of making a car interior “look nice” is putting leather-esque stitching everywhere. They better not be just injection molded faux stitching like the stuff on my 1990 TC’s dash and door surfaces.
I’m very surprised; I thought the return rate would be higher among those who opted for the guarantee.
But on the other hand, it turns out that most people weren’t interested in buying the guarantee for $500.
Maybe GM isn’t really ‘selling’ cars these days, as much as moving metal to True Believers. The primary purpose of the guarantee was to win new GM customers; did this happen? I doubt it.
Great quote: “We now can comfortably encourage the public to come take a close look at our products”. Does this mean you were uncomfortable about doing that before? What changed?
****I’m very surprised; I thought the return rate would be higher among those who opted for the guarantee.****
Most people finance and trade-in. Of those lots of them play four square. People are going to make sure their new car will suit them whether it’s a GM or not.
The buyback guarantee works best for people who pay 100% cash for their car.
On paper, this program is a huge failure. It was my understanding the money back guarantee was to lure GM-skeptical customers and/or result in conquest sales. 100 folks took them up on it?! I think that’s more of a failure than if 10% returned their cars, because at least then you have to figure folks were abusing the program. 100 folks out of 150,000 sales… I realize some customers went in for the guarantee and were probably talked into taking the $500 rebate instead. Where’s that (concrete) number?
So much for my idea of scoring a low-mileage month-old CPO.
Not that there’s much I’d be interested in in the first place, of course.
I can’t help but think that there are asterisks behind the whole guarantee deal. Knowing GM, I would think that there would be all sorts of fees and penalties involved with returning the car, to the point that it just wouldn’t be worth it.
This is probably why nobody took the guarantee and opted for the $500.
Even if the program was genuine, and you could return the car and get all your tax money, dealer fees, etc. returned, most people don’t trust GM enough to think they’ll walk away clean.
So if you return the car, do you get the taxes, dealer fees, transportation, etc. all returned? 100%?
Karesh is right – the success of the program will be in whether it drives increased sales. The Ts & Cs of the 60 day program make it extremely unlikely that anyone will actually return their vehicle. Lutz is merely trying to distract from the fact that GM sales have tanked, and will probably continue to tank.
At the risk of repeating everyone else, of course it wasn’t a flop. If it sold additional cars and only one was returned, it was an unqualified success.
From the GM website with some details:
The Buyback Price does not include the costs of any taxes (other than sales taxes), licensing, titling or registration fees, insurance, dealer installed accessories, aftermarket products or add-on equipment (other than factory options ordered with the vehicle), dealer fees of any kind, ancillary products including without limitation extended warranties or service contracts, finance charges, any negative equity, etc.
You must be able to deliver to the Participating Dealership a clean and unencumbered title to the Eligible Vehicle, which title has remained in Your name since the Delivery Date of the Eligible Vehicle.
Your Eligible Vehicle must have no more than $200 of damage as determined by GM or GM’s agent. Such damage may include, without limitation, internal or external scratches, scrapes, dents, odors, rips, burns, etc.
Your Eligible Vehicle must not have incurred damage or non-warranted repairs in excess of $200, regardless of whether such damage has been repaired.
Oh, and you can’t get your trade-in back, or the value of it. Oops!
That photo reminds me of the interior of the Levi’s Gremlin, with the blue denim upholstery and contrasting top stitching.
If they did not bribe the consumers with that extra $500 to not take the 60 day warranty, you can bet many more than just ONE car would have been returned.
It was a success, but it sure COST GM to pay $500*100,000 or so customers, a cool $50 million just for that month or so? But why would they care, it is not their $ they are wasting, it is Yours and My Hard Earned Tax Dollars!
And seriously, all cars would not fall apart in their first… 60 days, even a Yugo, or whatever the reigning Unreliability Queen is these days.
Autosavant :
October 15th, 2009 at 8:45 am
It was a success, but it sure COST GM to pay $500*100,000 or so customers, a cool $50 million just for that month or so? But why would they care, it is not their $ they are wasting, it is Yours and My Hard Earned Tax Dollars!
Transaction prices are up $8,000 over last September, according to JD Power. $500 a pop is nothing.
http://www.autoblog.com/2009/10/15/report-only-one-buyer-has-returned-a-gm-vehicle-under-new-60-da/
Autosavant :
October 15th, 2009 at 8:48 am
And seriously, all cars would not fall apart in their first… 60 days, even a Yugo, or whatever the reigning Unreliability Queen is these days.
The program isn’t primarily about short-term reliability. It’s about buyer’s remorse.
My take is that without clear, well-defined, and transparent goals stated at the introduction of the program, there is no metric to define “success” or “failure” when the program is completed. Haven’t we all seen this act before from The General?
And seriously, all cars would not fall apart in their first… 60 days, even a Yugo, or whatever the reigning Unreliability Queen is these days.
I agree, but my former lemon Honda started with problems on Day 1. Unfortunately, I would have taken the $500 in that case (given the choice), and would still have had to pursue the lemon law.
I’m just glad that “vette buyer came to his senses and went for the stick.
TexN :
October 15th, 2009 at 10:16 am
My take is that without clear, well-defined, and transparent goals stated at the introduction of the program, there is no metric to define “success” or “failure” when the program is completed.
I have yet to see any manufacturer do what you’re asking with any incentive program.
# John Williams :
October 15th, 2009 at 1:18 am
Nevermind the bluish tint…seems like GM figured one surefire way of making a car interior “look nice” is putting leather-esque stitching everywhere. They better not be just injection molded faux stitching like the stuff on my 1990 TC’s dash and door surfaces.
I don’t know if it’s across the line on their upgraded interiors, but when the new CTS was introduced, Cadillac made a big fuss about going back to handwork and actual stitching on the upholstery and trim. At the time they said that the customer can see the difference so it’s worth making the effort.
Car designers are not immune from trends and fads and contrasting detail stitching appears to be one of those fads. When they showed the Camaro Convertible concept, the press kit had orange stitching sewn into the hardcover binding.
I agree with Michael Karesh. The only measure of the success of this program is if it sells cars and increases brand equity.
My my my – doesn’t THAT just POO POO in your cornflakes. ONLY ONE RETURNED THE CAR out of 150,000. Spin it however you wish, it’s a HUGE win.
And you neglect to mention the increase in average sales price. Per AUTOBLOG: “J.D. Power data that reportedly shows that average purchase of a GM vehicle jumped to $35,069 – up $8,000 from September of last year. The massive jump in transaction prices also outpaces by a sizable margin the industry at large”
# David Holzman :
October 15th, 2009 at 10:44 am
I’m just glad that “vette buyer came to his senses and went for the stick.
According to the reports, it’s the other way around. RF should make that correction. Apparently the customer got tired of rowing and opted for the slushbox. In a car as heavy as the Vette, I might opt to avoid the clutch pedal too, despite how much I like sticks.
From Daniel Howes of the Detroit News:
As of a few days ago, Lutz said, only one car had been returned — a Corvette with a manual transmission. The dealer swapped it for an automatic.
I think TZ is right, the news about GM’s spike in transaction prices is intriguing. Industry-wide, transaction prices are up about $3000 so a $8000 bump is a big deal and represents a lot of money. It’d be interesting to see just which vehicles are contributing to the increased revenue. If it’s real and not just some kind of statistical artifact, it does bode well for GM.
# David Holzman :
October 15th, 2009 at 10:44 am
I’m just glad that “vette buyer came to his senses and went for the stick.
According to the reports, it’s the other way around. RF should make that correction. Apparently the customer got tired of rowing and opted for the slushbox. In a car as heavy as the Vette, I might opt to avoid the clutch pedal too, despite how much I like sticks.
From Daniel Howes of the Detroit News:
As of a few days ago, Lutz said, only one car had been returned — a Corvette with a manual transmission. The dealer swapped it for an automatic.
I think TZ is right, the news about GM’s spike in transaction prices is intriguing. Industry-wide, transaction prices are up about $3000 so a $8000 bump is a big deal and represents a lot of money. It’d be interesting to see just which vehicles are contributing to the increased revenue. If it’s real and not just some kind of statistical artifact, it does bode well for GM.
TZ,
Fair enough, but why does GM consistently feel the need to put a mouthpiece in front of the press to talk about how they exceeded their goals and how successful their unmeasurable programs were? I fall into “shut up and just do it” mode of management. Talk is cheap.
Tex
I have 2 points to add to this:
1. One of the conditions to returning a car under the buyback program was that you have to keep it for at least 30 days. The program started on 9/14, so the first day that anyone could possibly return a car under the program was 10/14. What time do dealers open again? For Bob Lutz to announce, at noon (PST) on 10/14 that the program has been a success is JUST A TAD BIT PREMATURE. Wait a few more days Bob, before deciding whether more than 1% returned…
http://www.reuters.com/article/pressRelease/idUS179698+10-Sep-2009+PRN20090910
2. So, only 100 out of 150,000 opted for the buyback program? That’s about 0.07%. Not something to toot your horn with.
Good point, TeeKay.
What a deal, basically GM was selling an insurance policy for $500 to cover the risk of return for 60 days. Then there is the disincentive to return the car by not including in the refund titling, registration fees, dealer fees & cost of dealer installed accessories ($900 protection package). This thing was a scam from the get go.
say it ain’t so, Ronnie!