General Motors Offers Consumers a Money-Back Guarantee

Posted by Sergei Lemberg, Esq. on September 12th, 2009

The Los Angeles Times reports that, in the midst of bankruptcy and slumping sales that weren’t even helped by the Cash for Clunkers program, General Motors is launching an ambitious campaign to woo car buyers: a money-back guarantee.

The advertising campaign, which is set to roll out this week, assures consumers that they can purchase a GM vehicle and return it for a refund within 60 days. A GM marketing executive said that what some are calling a Hail Mary pass is designed to close a “perception gap” and let people see for themselves that GM quality matches those of its foreign competitors.

The program starts on Monday and runs through November 30. According to the company, car buyers can return new vehicles between 31 and 60 days of purchase, providing the car has less than 4,000 miles and the payments are current.

It sounds legitimate, but before you take the plunge and buy a new GM, it pays to read the fine print. GM’s “Details and Limitations” can be found by clicking here.

There are a number of conditions you have to meet in order to return what they term an “eligible vehicle,” and there are several exceptions included. There’s also a lot of paperwork you have to produce. There are also what appear to be giant loopholes built into GM’s agreement, such as a requirement to produce “any other documentation GM or the Administrator may reasonably request” and a requirement that “your eligible vehicle must pass a purchase inspection conducted by GM or GM’s agent.” Caveat emptor.

GM is Back in the Leasing Business

Posted by Sergei Lemberg, Esq. on September 4th, 2009

According to a report in the Detroit Free Press, GMAC is going to start leasing new vehicles again. In Ohio, Michigan, New York, Connecticut, and New Jersey, GM will have a leasing program in conjunction with U.S. Bank. Throughout the rest of the country, GMAC will be providing leases.

The leases will be available for the following 2009 vehicles: Chevrolet Traverse, Chevrolet Malibu, and Cadillac CTS. The following 2010 models will also be available for lease: GMC Acadia, Chevrolet Equinox, Buick Enclave, and Buick LaCrosse.

GM Setting Up Shop on eBay

Posted by Sergei Lemberg, Esq. on August 11th, 2009

The New York Times reports that GM and eBay have cut a deal to use the auction site to sell inventory from California dealerships. The new portal, gm.ebay.com, launches today, and will use eBay’s “buy it now” format to sell GM cars. The price will be set at the supplier price, but potential buyers can offer a lesser amount, which the dealer may or may not accept.

Considered a pilot program that could expand nationwide in September, the GM-eBay site is expected to initially list 20,000 vehicles. Although eBay admits that most buyers don’t complete a new car sale online, both the auction site and the automaker hopes the partnership will spur buyers to test drive vehicles at their local dealerships.

GM Bankruptcy a Looming Lemon Law Disaster

Posted by Sergei Lemberg, Esq. on May 23rd, 2009

It is widely believed and reported that General Motors will be filing for bankruptcy by June 1.  At midweek some thought the bankruptcy filing was not inevitable and its stock rose significantly, but by the end of the week the company drew another $4 billion from the government and the bankruptcy filing seems all but certain. On the lemon law front, we are now told that settlement checks will take 4-6 weeks to process (not 1 week as previously done) and that all repurchases are being stopped. 

This bankruptcy may be worse for consumers than Chrysler. First, GM is bigger than Chrysler, and so many more people will be affected. Second, at the outset of its bankruptcy Chrysler made a mistake by failing to honor pre-bankruptcy settlements in  lemon law and warranty cases. From the bankruptcy perspective this isn’t deplorable – after all all kinds of people are being hurt — but from the PR perspective it creates a problem.  How do you expect car buyers to trust your warranty promises if you won’t honor lemon law settlements?  But it took them a week to announce that checks will be reissued (which hasn’t yet been done), and so the uncertainty created a problem.

Chrysler also tried to sit on two chairs at the same time by seemingly having its purchaser assume existing warranties and, at the same time, staking out a legal position that all existing lemon law and warranty claims would be ‘unsecured’ (read ‘unlucky’) in bankruptcy.  Ultimately this inconsistency cost them time and bad press.  It remains to be seen what Chrysler’s position will ultimately be.

Looking at this small-dollar high-PR-exposure mess GM is certainly going to take notice. Having learned the lesson and the potential pitfalls, I think it is much more likely to stake out a position that it will keep fixing cars but won’t pay for any lawsuit or claim liabilities arising pre-bankruptcy.