The GM 60 Day Guarantee - Good or Indifferent?

As GM works to build confidence back into their core brands, Chevrolet, Buick, GM and Cadillac, they have just announced their new 60 - day guarantee. If you don’t love your new GM vehicle, you can return it. So what are the details behind this event. So far, they seem pretty easy to understand. Any purchase, outside of medium duty trucks, can be returned from day 31-60, as long as the vehicle has less than 4000 miles. The program covers all 2009 and 2010 models, as long as delivery happens before November, 30th. The refund will include all vehicle cost, as well as tax, but won’t cover any added on accessories or negative equity rolled into the loan. It does not apply to lease vehicles.

Although GM and other officials don’t feel that this will result in huge returns of vehicles, there could be a boost for the used car market. As is well known, the Cash for Clunkers had negative impact on the used car business, in several different areas. Used vehicles were already selling for up to $3000 over book at the auctions, making it more and more difficult for franchise dealers to stock their lots, and nearly impossible for independent dealers to afford auction vehicles. The Cash for Clunkers program took thousands of used inventory out of the possible universe, to the tune of 690,000 units, but that was just the ones that were traded in and “supposedly” destroyed. The other casualty of the program were the “clunkers” that were sitting on primarily indy dealer lots. In speaking to an independent dealer in Billings, MT in August, he stated that many of the vehicles on his lot took an immediate value hit, in many cases creating his own negative equity.

So how can the GM program, if successful, take a bite out of the availability of the used vehicle universe? All of the vehicles that will be returned on the GM program will immediately be available into the used vehicle market. This may not help many indy dealers, as it would be rare that these vehicles would make it back to auctions, although they are eligible to be provided to wholesalers. Most likely, since these vehicles will all have under 4000 miles on them, they will become available as GMCUV, or certified vehicles. It is well know that CPO vehicles do have a higher profit margin than new vehicles from franchise dealers, this could ultimately be a win/win situation. A nice change for all those stores still waiting for their Cash in the Clunkers program.

http://tinyurl.com/GM60Day