GM’s Lutz says automaker may extend money-back guarantee program due to successful results

By AP
Friday, September 25, 2009

GM may extend money-back guarantee program

NEW YORK — General Motors Co. may extend its money-back guarantee program after the much-touted promotion wraps up in November, the company’s vice chairman said Friday.

Bob Lutz said that the program is succeeding in its main goal: getting on-the-fence car shoppers to consider buying a GM product.

“What it was designed to do was drive consideration” of GM vehicles, Lutz told CNBC in a Friday morning interview. “It is having exactly the effect that we wanted.”

The program allows buyers of Chevrolet, Cadillac, Buick or GMC to return their vehicle for a refund between day 31 and day 60 of ownership. The program launched Sept. 14 and runs through Nov. 30, which is the last day customers can take delivery of their new vehicles to qualify for a refund.

Shoppers can also waive the guarantee and opt for a $500 rebate toward the purchase of their vehicle instead.

The program, whose launch coincided with an advertising campaign featuring newly minted Chairman Ed Whitacre, is designed to lure customers who were uncertain about buying a GM vehicle. GM officials have acknowledged their products have been dogged by perceptions of lackluster quality and say the program is designed to show consumers that those perceptions are outdated.

Although it is too early for any car buyers to have returned their vehicles yet, Lutz said he expects “way under” 1 percent of buyers will actually ask for a refund.

The auto research Web site Edmunds.com said Friday the program is succeeding in drawing more shoppers to GM products, particularly for the Cadillac luxury line and the GMC truck and SUV line.

“The company has come a long way in product development, but the brand has to overcome negative perceptions in order to win more customers,” Edmunds CEO Jeremy Anwyl said in a statement.

Lutz also predicted a weak sales month for all automakers in September. He blamed both a “hangover” from the government’s Cash for Clunkers program and low showroom inventory.

“We are seriously short on inventory,” he said.

The clunkers program was wildly successful in getting consumers to trade in their old vehicles for more fuel-efficient ones and gave a strong lift to auto sales in July and August. But the incentive also pulled forward some buyers who would have bought vehicles in the fall.

Automakers report September sales on Oct. 1.

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