September 11, 2009 in Business

GM offers buyback deal

New money-back guarantee central to marketing push
Ken Bensinger Los Angeles Times
 
Tags:GM

Company to sell Opel to team

 BERLIN – General Motors Co. will sell European unit Opel to Canadian auto parts maker Magna International and Russia’s Sberbank in a deal that preserves GM’s ability to develop new cars with its longtime subsidiary. GM will see a 55 percent stake in Adam Opel GmbH transferred to the Canadian-Russian team but will keep 35 percent for itself, with 10 percent held by the workers.

 The deal still depends on conditions that could take weeks or months to work out, such as final agreement for government financing and union support for what could be painful cuts.

 Thursday’s announcement was a politically charged win for German Chancellor Angela Merkel, who saw the deal as the best change to save jobs at a major employer less than three weeks before national elections Sept. 27.

Desperate to reverse its sinking market share, General Motors Co. said Thursday it would launch an aggressive marketing push offering consumers a 60-day money-back guarantee.

The “May the Best Car Win” campaign kicks off Monday and runs through the end of November. It will include widespread print, radio and television advertising. Shortly after taking control of the board this summer, company chairman, Edward Whitacre Jr. publicly stated his intentions to increase the automaker’s share of U.S. sales, in stark contrast to the company’s prior statements that it would lose ground as it shuttered and sold brands.

The automaker’s share of the U.S. market has been steadily slipping for years, but the decline has hastened in step with souring public perceptions of the company’s financial woes: Through the first eight months of the year, GM had a 19.4 percent share of the U.S. market, compared with a 21.6 percent share a year earlier. To prevent liquidation, GM was forced to borrow $50 billion in taxpayer funds, and in June it filed for Chapter 11 bankruptcy protection.

To address negative buyer sentiment, GM is removing its corporate logo from vehicles and will not use the company name in advertising. Instead, executives say, it will focus on the product.

“We’ve got to close this monumental chasm between the reality of GM’s current product lineup and the public perception of the lineup,” said Bob Lutz, GM’s head of marketing.

The centerpiece of the program is a money-back offer on new vehicles within 60 days of purchase if customers don’t like them.

According to GM, any car can be returned, no questions asked, as long as the purchaser is current on payments and has not driven the car more than 4,000 miles. The dealer will repurchase the vehicle, and GM will compensate the dealer.

To protect itself from an unexpectedly high percentage of returns, he said, GM has taken out insurance on the offer. Lutz said that in a similar program run by Vauxhall, GM’s unit in the United Kingdom, about 2 percent to 3 percent of purchases came back.

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