24/7 Wall St. TV: GM's Own "Clunkers" Program

The “cash for clunkers” program was not kind to GM. It did not have a single vehicle on the list of the ten most purchased cars which was dominated by Toyota (TM), Honda (HMC), and Ford (F). GM had 17.6% of the total new cars sold, behind Toyota’s 19.4%. The plan did not do much for GM’s August sales, which fell 20% from the same month last year.

GM has decided to launch its own gimmick to get new car buyers. It will offer customers a Satisfaction Guarantee which allows buyers to return their new GM vehicle to their dealer between 31 and 60 days of purchase and receive a refund of the purchase price for the car.  The vehicles have to be bought by November 1 to qualify.

[youtube=http://www.youtube.com/watch?v=Au0jYLcE6FU&w=560&h=340&fmt=18]

GM has to confront the possibility that the Satisfaction Guarantee will help sales over the next six weeks but doom them for later in the year.

The Satisfaction Guarantee has a relatively good chance to ruin whatever turnaround has begun at GM. GM will have developed a reputation as a big car company with products that no one wants if the program fails. If it succeeds, GM may only be selling cars now that it would have sold anyway in two or three months.

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Executive Producer: Philip MacDonald