Beginning Monday, September 14th, General Motors (GM) will be launching an unprecedented money-back guarantee on new cars. While most retailers offer you your money back should you be dissatisfied with your purchase, such programs are a rarity in the car industry. So, why the push for more car sales? While Cash for Clunkers was a success for automobile manufacturers, Detroit accounted for only 38.6% of sales. Although GM was not represented in Top 10 brands sold through the government program, the manufacturer did come in second in overall sales. As a result, the GM ramped up production and would probably like to keep the momentum going.
While there will undoubtedly be debates as to whether the plan is a Hail Mary or an innovation, GM seems intent on growth in its post-bankruptcy era. Unlike Hyundai ‘s program where as a purchaser could return an automobile if they were to loose their employment, GM does have some data to base their expectation of returns. The manufacturer offered a similar program several years ago in the United Kingdom. Overall, 3% of buyers returned their vehicles, a number GM believes should be similar to its US version of the plan.
As you can imagine there are conditions to the guarantee program. Qualified vehicles must:
- Be purchased between September 14, 2009 and November 30, 2009 (although GM may extend the period)
- Be a new 2009 or 2010 Buick, Cadillac, Chevrolet or GMC
- Be returned between 31 to 60 days of purchase, and
- Have been driven no more than 4,000 miles.
Also, the purchaser must not be behind on loan payments if the vehicle was financed and any amount used to pay off the loan on a trade-in above what the trade-in was worth will not be refunded.
As always, my concern lies with people taking on loans when they are not in the position to do so. I encourage everyone who considers taking advantage of GM’s program to construct a budget to determine if a new vehicle payment is feasible. If your budget does not indicate you can commit money toward savings, and meeting your current obligations comfortably by taking on a new financial responsibility, you may need to pass on a new car.
More information will be made available Sunday, September 13th on GM’s website. Please visit gm.com/guarantee at that time.