GM Touts Money-Back Guarantee, But Consumers Ignore It

(MoneyWatch)  At first glance, the money-back guarantee offer at General Motors looks like a runaway success, but you can take the same numbers and show that in a couple of important ways it's a dismal failure.

To be sure, GM is already touting it like a big success. At first glance, the numbers sound impressive. GM announced on Nov. 20 that fewer than 200 out of 222,000 customers so far opted to return their vehicles and take advantage of the guarantee. That's only about one in a thousand.

Not only that, but GM officials, including Mark Reuss, GM vice president of global product engineering, will personally interview as many of the 200 as possible, to find out why they weren't satisfied with their GM products. "People are not satisfied and we're going to find out why," Reuss said in a written statement.

However, there's a lot more to that one-in-a-thousand number than meets the eye, because GM gave customers the option to pick the money-back guarantee or a $500 discount on top of any other incentives. GM's "Satisfaction Guarantee" was announced Sept. 10 and runs through Nov. 30.

So far, GM disclosed that only 653 people out of the eligible 222,000 chose the guarantee. In other words, more than 99 percent opted for the $500 discount. That sounds like people don't see much value in the guarantee. At least, they don't see $500 worth of value.

Not only that, it also means that about 30 percent of the few people who opted for the money-back guarantee opted to return their GM cars and trucks. That's a far cry from one in a thousand, and it would be ruinous if that percentage held, and if a significant percentage of consumers had chosen the guarantee over the $500.

The way GM pitched the money-back guarantee when it was introduced was that GM acknowledged it had a quality reputation to overcome, even if that reputation was outdated. The money-back guarantee was a way to start doing that and get back on consumer shopping lists.

It would be a fairer test if GM dropped the $500 discount and simply put the money-back guarantee on all its products, in a more straightforward manner. The money-back guarantee was supposed to be a hallmark of the "New GM." The $500 discount and all the fine print sound like the same-old, same-old, "Old GM."

Photo: GM