GM's money-back guarantee
GM will begin to run ads for its new "May the Best Car Win" program. Buyers can take a new GM car off the lot and drive it for up to 60 days. If they don't like it, they can return the car without penalty between the 31st and 60th day. The offer expires on November 1.
The introduction to the program will include TV ads starring new GM chairman Ed Whitacre, who is an odd selection. Whitacre is a former phone company executive with no experience in the car industry. He is also a 67-year-old pitchman for a company that is trying to appeal to younger buyers. In short, he is the wrong choice.
The plan is risky for several reasons, most importantly, a lot of people may return their cars. If the GM product doesn't hold up to consumer scrutiny, negative headlines about GM failing to keep customers, even with a money-back guarantee, will damage its already shaky image.
The other concern is that the guarantee program does not attract any net new buyers over the next two quarters. People who may be planning to buy a GM car in early 2010 might buy the car now instead. That will pull sales forward into the next six weeks, but sales in the months following the special offer period may suffer. The "cash for clunkers" program seems to have caused a similar issue. Now that the program is over, sales of cars in the U.S. have dropped sharply.
If GM thinks it has good cars, it should let them stand on their own. A gimmick won't fool buyers.
Douglas A. McIntyre is an editor at 24/7 Wall St.