"General Motors' new 60-day money back guarantee campaign seems to offer something for everyone, except taxpayers."
General Motors Company’s new money-back guarantee has come under fire from the National Taxpayers Union, which charges that GM is using the money from the $49 billion Federal bailout to campaign to finance it.
“General Motors’ new 60-day money back guarantee campaign seems to offer something for everyone — except taxpayers, said Vice President for Policy and Communications Pete Sepp of the 362,000-member National Taxpayers Union
The negative comments followed the rollout of the new advertising campaign featuring GM’s new chairman Ed Whitacre, strolling through the GM Design Center in Warren, Michigan and drawling in an English-like dialect.
The conservative NTU was an opponent of the original bailout and — as a proponent of the “Let GM Fail” school of thought — it not surprising that it criticized the new plan, which is unusual in the automobile business where the value of a vehicle drops dramatically once it leaves the dealer’s lot.
“Normally a strategy like this would be a bold move to compete in the marketplace, one that consumers and shareholders ultimately decide to reward or punish. Unfortunately, with this 60% government-owned company, taxpayers don’t have the option of ‘pulling out’ of GM and putting their investments elsewhere; unless, of course, they’d like to be prosecuted by the IRS and spend a few years in jail,” Sepp incoherently noted.
Sepp also referred to a recent Congressional Study that says that it’s doubtful the Federal loans to GM and to Chrysler will ever be repaid. Of course, under his illogical way of thinking, if GM fails, then taxpayers will incur a huge loss and their taxes will have to increase to cover the unpaid debt.
“It’s no wonder GM can afford to offer money-back guarantees,” he said.
Click on chart to enlarge.
“Since the federal government owns 60% of GM, maybe it ought to consider offering a money-back guarantee to the taxpayers as well. Instead, with this money-back guarantee GM continues to flaunt the enormous taxpayer investment in it,” said Sepp, citing a study by the State of New York Banking Department that indicated a new car loses up to 20% its value the second it drives off a dealer’s lot.
Omitted from Seth’s rant is an honest accounting. To fairly access the revenue of the program, the number of vehicles bought above the current baseline would have to be compared with the number of vehicles returned and what their actual subsequent disposition cost was. Only then could you assess the success and cost of the program.
Ron Bloom, Obama’s automotive czar, has said the White House and the US Treasury intend to let GM’s new board of directors set the strategy – and tactics – for new GM and it doesn’t plan to interfere.
Bob Lutz, GM’s new marketing czar, however, has said GM has to do something dramatic to get consumers to look at the improvements in the company’s product line. Offering a 60-day money-back guarantee, while potentially expensive, also could help change perceptions of GM’s product line and boost market share, which Whitacre has decreed is an absolute necessity for the “new” GM.