[Ming]

GM's Dumbest Move Yet
Rich Smith
June 9, 2004
The Motley Fool

I'm sorry. Is the headline a little harsh?

Well, I think deservedly so. And here's why (and just so you know I am not making this up, here's the link to General Motors' (NYSE: GM) website to prove it): Starting today and running through July 6, 2004, GM will pay $250 cash to any customer who:

Takes any GM-family vehicle home for a "24-hour test drive" and then
Buys another company's car instead of the GM car.

Call it a "customer disloyalty" program.

Think about it. Say you really have your heart set on a fancy new Dodge Durango from DaimlerChrysler (NYSE: DCX). Or maybe one of the whiz-bang new Ford (NYSE: F) Escape hybrid SUVs. But for all that Dodge or Ford is offering a hefty sales incentive, you think the price is still a bit steep.

Never fear, oh intrepid consumer, hero of the American economy. GM is here to bail you out. Just pick yourself up a Chevy, a Buick, whatever (it doesn't matter which one, because you aren't going to buy it anyway), take it home and park it in the driveway, then fill out some papers and pick yourself up a nice fat check from GM after you purchase the competitor's car or truck, no questions asked.

Now if you are asking yourself, why didn't the Japanese think of this idea, here's the answer: The Japanese aren't idiots.

Full article here

 

[LGRpup]

Well obviously this guy doesnt like the new deal. Personally I still dont know how to feel about it, it seems like a double edged sword.

 

[GM-10]

Are they on crack???

:zippy: :mf_boff:

Like they needed to put more incentives on the damned cars.

 

[chadbarb99]

That's their second dumbest move. Their DUMBEST move was killing the F-bodys

 

[akumaknight]

This is an incentive to NOT buy the car though. Whats to stop some one from using different names and going into like 5 dealerships and ripping GM off for 1250 bucks? (hey... that would buy the wildcat I'm trying get money to gether to buy...)

 

[Tone]

Ming, I see what you are getting at, but look at it this way. Say I'm a person who hasn't even considered a GM car in years. Say I'm in the market for a mid-sized family car, and I'm looking at the usual suspects: an Accord, a Camry maybe even a Mazda6 or a Nissan Altima.

Sure, GM has a lot of incentives, I think to myself, but the last GM car I drove was crap -- noisy engine, cheap-looking interior, spongy brakes.

But, I find out GM is willing to literally bribe me to try one of their cars for 24 hours. I would probably have one of two reactions - either this is easy money or GM must be really confident in its cars if it's willing to blow $250 just to get me to consider one.

Either way, there is now a possibility a GM car might make it on to my list.

Say I drive a Malibu or an Impala or a GP and like it -- GM gains a sale it might not have otherwise had. Say I drive one of those cars and still by an Accord. If the GM product was at least competitive, it might make it on my list next time.

Plus, I suspect that to get the $250, I'll need to fill out some kind of survey to explain what I didn't like about the GM car I drove. That will provide GM with valuable marketing information on people who truly could have been buyers to help GM build competitive cars.

It may seem crazy, but I do think given that there are a whole generation of people like me who haven't seriously considered a GM car in a long time, it might be an appropriate tactic.

 

[Rex Raider]

I'm sure that you have to prove that you bought a car elsewhere in order to claim your $250. Any guy on the street can't just go in mulitple times to colect $250 each time.

I agree with the writer of the story. What's stopping someone with NO intention of buying a GM from just pocketing $250 when they go buy the non GM car they want.

 

[39255]

I test drove the chevy silverado before I bought the 04 F-150 just to see my options. This program is like throwing away money. Haha!

 

[paul8488]

i wonder how often people go out for test drives and truly are considering multiple vehicles. most people i encounter know what they want, and test drive others to confirm their decision. though most of the people i know are into cars, and generally know a fair bit about the vehicle beforehand. i suppose those less versed in the ways of the auto industry really might be swayed by an excellent test drive in a vehicle they weren't actually considering.

i still think the $250 is a foolish idea. reward GM buyers, not the competitions buyers. they should run it the other way... prove you test drove a competitors model and get the $250 when you buy a superior GM!

 

[IMPALAon20s]

i've heard people here complain so much that import buyers/fans dont give GM a chance to prove their products are improved. advertising isn't going to change consumers minds anytime soon. rebates alone wont either, since they imply vehicles are undesirable. if this is what it takes to get people familiar with gm's newly improved products, so be it. think benifits of repairing your image far outweighs risk involved. and remember, they have to "BUY A NEW VEHICLE" and it probably will require it be equal or greater value and of similiar type, so these payouts will probably be rare.

 

[IMPALAon20s]

Originally posted by paul8488@Jun 9 2004, 12:19 PM
i wonder how often people go out for test drives and truly are considering multiple vehicles. most people i encounter know what they want, and test drive others to confirm their decision. though most of the people i know are into cars, and generally know a fair bit about the vehicle beforehand. i suppose those less versed in the ways of the auto industry really might be swayed by an excellent test drive in a vehicle they weren't actually considering.

i still think the $250 is a foolish idea. reward GM buyers, not the competitions buyers. they should run it the other way... prove you test drove a competitors model and get the $250 when you buy a superior GM!

well i wanted a silverado for awhile, shopped f150's and silverados, new and used.. wasnt excited about either, but im loyal to GM so was seconds away from signing paperwork for a new silverado... when i glanced over and saw the impala.. put pen down, went out to look.. signed for impala with out even driving it. peoples purchasing habits can be instinctive. and one of the biggest vehicles that will part of these test drives will be the new malibu. i've driven it.. and mannnnnn.. launch is quick, road noise is at almost zero, interior is well layed out and front seat area seem almost as roomy as my impala. although front end still looks odd to me.. but still dont think gm has much to worry about, the vehicles will have what it takes to win most consumers who give it a chance over.

 

[BigAls87Z28]

No, this ranks as the #1 worst idea in GM history. People are gunna pocket this money left and right. I cant belive this? Is this for real? Is it april first again? I think that GM needs to plan this out again. There has to be some sort of clause that prevents people from just pocketing the cash? GM cant be that stupid.

 

[monkeylizard]

I was shocked when I saw this press release as well. But after giving it some more thought here is what I came up with....

The WHOLE point is to get peole into showrooms and, more importantly, behind the wheel of a GM product. Maybe they have their eyes set on something else when they walk in the dealership to just waste time and get $250, but what if just 2% of those people are impressed with the test drive. That means not only new sales, but also free advertising because those 2% are going to spread the word about their "surprise". Noone listens to long-time loyal consumers, but people pay attention to those whose minds have been changed. In addition, as someone else noted, it will provide good marketing data from those who do purchase another product. I'm sure they will have to fill out a survey that let's GM know what turned them off out their product as well as what product features the competition execute better. And I'm sure someone will have to bring in their proof of purchase of another product to claim their $250.

 

[Rex Raider]

Well, I'm reconsidering my view on this, to some degree.

There are ALWAYS people who are going to take advantage of a situation. There will be the guy that has no intention of buying a GM, but test drivving it just to pocket the cash.

But on the other hand:

Remember GM's contest where they gave away cars recently? This isn't all that different.

250$ per person at 100 people comes up to $25000 (the price of an average car).

If 1 person out of that 100 (1%) actually changes his mind and buys the GM instead of a competitor, it's the same as giving away a free car to every hundredth person.

That's something that would get people into dealerships.

I'm assuming that GM has done some research into this, and is looking at a number higher than 1%.

 

[Ming]

Originally posted by Tone@Jun 9 2004, 12:13 PM
Ming, I see what you are getting at, but look at it this way.

Sorry, I didn't write the article. It's from the Motley Fool website. :type: I only write my rants in the lounge/general discussion area or editors commentary sections.

 

[patscircus]

I sell cars for a living. I hate all the people that come in and waste my time with no intent to buy. I feel like getting peoples work address ,so I can go over to their work and waste their time. This new program will drive us crazy. Why don't they give A $250.00 bonus to all us good salespeople who sell lots of there automobiles instead of inviting all the strokers???? :mf_boff: <_<

 

[stewacide]

I agree with Tone in the sense that this would make sense to get customers to look at a new, competative GM product in a segment where they aren't on people's shopping lists already. E.g. the Malibu, upcomming Cobalt, G6, Colorado, CTS, STS, etc.

However if you're going to pay people not to buy a Cavalier or a Silverado or whatever badly uncompetative product it makes no sense.

Moral of the story: They need to target this at their best products.

 

[tgagneguam]

I generally agree with the investment strategies of the Fools at Motley Fool. I'm less inclined to support some of their editorials, and this one is one of the reasons why. Had the editorialist taken the time to determine the success (or failure) of the similar Mistubishi program and used that as support for his argument, it might have been useful to read.

However, the Fool seems somewhat biased against GM. Not surprisingly, investing in GM's stock (even longterm) would most likely translate into poorer performance than, say, the S&P 500 perhaps. But this particular editorial seems more like shooting from the hip as opposed to offering anything useful in the way of insight.

I agree with what other GMInsiders have said about this plan: it offers a variety of benefits, even if these benefits don't immediately spawn new vehicle sales.

 

[patscircus]

Gm should put more thought into marketing. First Hot button, next was 24 hour test drive rebate, now 24 hour $250.00 incentive. What is next ??? Not including all the rebate money out there! How come all the foreign car makes don't have all this dumb incentive programs out there and still manage to sell lots of cars and trucks with small to little discounting ??? Lets wake up GM !!!!

 

[BigAls87Z28]

Originally posted by Rex Raider@Jun 9 2004, 06:11 PM
Well, I'm reconsidering my view on this, to some degree.

There are ALWAYS people who are going to take advantage of a situation. There will be the guy that has no intention of buying a GM, but test drivving it just to pocket the cash.

But on the other hand:

Remember GM's contest where they gave away cars recently? This isn't all that different.

250$ per person at 100 people comes up to $25000 (the price of an average car).

If 1 person out of that 100 (1%) actually changes his mind and buys the GM instead of a competitor, it's the same as giving away a free car to every hundredth person.

That's something that would get people into dealerships.

I'm assuming that GM has done some research into this, and is looking at a number higher than 1%.

I was thinking about that angle...but there are a lot of people that want stuff for free.