Incentive plan revs up GM's car-selling efforts

April 01, 2009|By Ken Bensinger and Alana Semuels | Ken Bensinger and Alana Semuels,Los Angeles Times

A day after President Barack Obama threw down the gauntlet for the American auto industry, General Motors Corp. began once again the work of selling cars.

On Tuesday, even as its new chief executive acknowledged the growing possibility of bankruptcy, the ailing carmaker announced an incentive plan that, in part, will cover car payments for customers who lose their jobs.

The program, which GM is calling "Total Confidence," is designed to lure American back into the showroom.

"Consumers right now are looking for corporations to be sympathetic with what they're going through," said Jeff Goodby, co-chairman of Goodby, Silverstein and Partners, an ad agency that promoted a similar program by Hyundai Motor Co.

The White House has given General Motors 60 days, and Chrysler 30 days, to work out their structural problems before the federal government yanks financial support. The clock is ticking, but even if negotiations with entrenched bondholders and the United Auto Workers union are successful, one problem rises above all others.

No matter how sharp the budgetary knives the carmakers wield, GM and Chrysler - and the $17.4 billion in taxpayer cash they've borrowed - are sunk if they don't start selling more vehicles, and fast.

There's no time now to change the cars GM and Chrysler deliver to dealership lots, but they can change how they're selling themselves to the car-buying public.

Launched in January, Hyundai's Assurance program allowed laid-off customers to return their new cars, giving confidence to otherwise nervous consumers. The Korean carmaker's U.S. sales declined 14 percent last year, but with the incentive in place, they have risen 5 percent through February.

Good through April 30, GM's Total Confidence program will make as many as nine car payments of up to $500 for car buyers who are laid off within two years. It will also cover any underwater portion on a financed vehicle that is later traded in for another GM vehicle.

The plan was similar to one introduced Tuesday by Ford Motor Co. that will cover up to 12 months of payments, up to $700 apiece, in the event of unemployment.

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