Tuesday, March 31, 2009

GM and Ford Announce New Buyer Assurance Plans

I do not agree with many of the actions taken by President Obama, I applaud President Obama's actions with regard to the auto companies. He has acted boldly, swiftly and decisively. I did not vote for him but I have been impressed with his leadership ability. These are difficult times and it requires substantial actions to get us thru these difficult economic times. The banks and AIG should have been handled in a similar manner to the auto companies.

The same needs to said of the leaders of our troubled companies. Today, Fritz Henderson the new CEO for GM announced its "Total Confidence" program. The Total Confidence program will make up to nine payments for up to $500 if the buyer is laid off during the first year of ownership. Customers do have to qualify for state unemployment to be eligible for the program.The program appears to be testing the waters, since it is effective from April 1 thru April 30th.

Ford Motor Co. also announced a similar program Tuesday, which will take over customer's payment of up to $700 a month for a year in the event of job loss. The Ford program goes thru June 1st.

These programs are similar to the Hyundai's program which has limited severe declines in their sales via a creative incentive for its customers. Hyundai will cover a new vehicle's depreciation if customers return a car within 12 months because they are unable to make payments due to a job loss, disability etc. GM's U.S. sales declined 51 percent and Ford's U.S. sales were down 44 percent in the first two months of 2009, compared to a market that declined 39 percent overall. Hyundai's sales rose 5 percent over the period.

These type of programs directly impact buyers concerns about the future. Buyers lack confidence that they will have their jobs in a few months, so why would someone buy a car under that scenario. People are also concerned about buying a car from a bankrupt company.

My take is that the U.S. based companies need to be aggressive to reassure their buyers that they are going to survive and prosper. GM and Ford should have instituted these programs originally, not in reaction to Hyundai's program.


  1. Dear Pete,

    It is interesting to learn US Auto makers are introducing these programs. I believe these customer oriented program will work in favor of their recovery. I hope good competition continues so that it will benefit consumers and bring good business result to manufacturers.

    Thank you for your post.

    Shaw Funami
    Fill the Missing Link

  2. Hello Shaw,

    I agree that these programs can help overcome buyer hesitation when purchasing. Ultimately, increasing sales is what will get these companies back to profitability.

    Thank you for your comment!

    Pete Baca
    The Car Enthusiast Online

  3. Hi Pete .. I don't do politics or religion or money .. too tricky if we don't know enough .. so I steer gently clear!

    However we have your President here today .. he managed to snuck out with "The Beast" .. somehow, someway, that the tv didn't know about, to get to his breakfast meeting at no 10 Downing Street!! The Beast is an interesting vehicle .. how many have you got???? in the States?

    Some Ford workers are staging a sit in as they reckon their redundancy package is insufficient - it started in Norther Ireland and has now spread to a couple of plants here on the mainland ..

    Those car finance packages sound perhaps a good idea if the world doesn't go any more pear shaped and if it starts sorting itself out .. who knows ---- "how cold my toes are tiddlepum"

    Hilary Melton-Butcher
    Positive Letters

  4. Hello Hilary,

    Unfortunately, you have me on "The Beast", we must have many here! Please give me some information!

    We are going to have some very serious disuptions in the auto industry if this economy gets worse.

    Best Regards

    Pete Baca
    The Car Enthusiast Online