GM’s ‘love it or return it’ offer: Desperate move?

In an attempt to catch up with a resurgent Toyota, the U.S. auto giant is resorting to an unusual measure — a 60-day, money-back guarantee

TheWeek summarizes: Not so hot on your brand new 2013 Chevrolet Camero 1LE? GM will take it back for a full refund within 60 days of your (regrettable) purchase.

Best Opinion:  Cleveland Plain Dealer, L.A. Times, AdAge

In a radical move “that makes car buying akin to shopping for shoes at Nordstrom,” says Jerry Hirsch at The Los Angeles Times, General Motors this week launched a “love it or return it” program that allows consumers to return their new Chevrolets if they’re dissatisfied. The deal, which promises a 60-day money-back guarantee, applies to all of Chevy’s 2012 and 2013 models, as long as the cars are returned undamaged and with fewer than 4,000 miles on their odometers. The promotion also comes with “no haggle” low prices that are intended to clear Chevy’s 2012 inventory. GM’s offer is an attempt to catch up with a resurgent Toyota, whose sales have climbed 29 percent in the first half of 2012, while Chevy’s have inched upwards by only 6 percent. But will it work?

Consumers will appreciate the deal: The “love it or return it” deal, which unmistakably conveys GM’s confidence in its products, “might give consumers more peace of mind when buying a car,” says Shaina Cavazos atThe Cleveland Plain Dealer. Clearly, the company expects that only a “low percentage of buyers” will actually return their cars. Consumers will “think they got a great deal from day one, and they won’t feel buyer’s remorse later on.” Bottom line: Prospective car owners “might consider GM when they wouldn’t in the past.”
“General Motors offers money-back guarantee for 2012 Chevrolets”

And the “no-haggle” offer is a winner: The “no-haggle” offer could have an even “bigger effect on sales,” says Hirsch, given that negotiating over car prices is a major headache for most consumers. It’s also “an efficient way to sell cars,” since sales staff “won’t be tied up for long periods haggling on a price with one client, leaving them free to move on to the next potential buyer.”
“General Motors’ Chevrolet brand offers refund to new-car buyers”

No. Deals like these hardly affect sales: Industry analysts say deals like “love it or return it” are only marginally effective in luring new customers, says Josh Sanburn at TIME. It seems consumers would rather navigate sales promotions and deep discounts instead of an “everyday low prices” model, which “suggests that we hate paying the manufacturer’s suggested retail price even more” than we deplore haggling with salespeople.
“What’s behind GM’s new 60-day money-back guarantee?”

And the promotion smacks of desperation: “To use a football metaphor, trick plays are great but how many times can you go to the same playbook?” says Rich Thomaselli at AdAge. GM tried a similar money-back guarantee in 2009, shortly after it emerged from bankruptcy. The company’s marketing chiefs also made the same move when they were employed at Hyundai, which in 2009 “allowed buyers who lost their jobs to return their recently purchased Hyundais, no questions asked.” GM is even making a patriotic appeal, running a series of ads, narrated by actor Tim Allen, proclaiming that “Chevy’s confidence and determination is back” thanks to the American taxpayer.
“Chevy’s ‘love it or return it’ recalls Hyundai strategy”

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