Missing the Fear Behind GM's Move
Listen to news outlets like CNNMoney, though, and the oft-troubled carmaker is making a proactive attempt to attract new customers. In other words, they are operating from strength.
Tune into other news outlets (or reality) and you'll see that GM is dealing from an increasing level of weakness.
The first and only quote CNNMoney ran is from a GM marketing executive, who trumpets the confidence and peace of mind these policies give to customers. Forget the trumpets -- let's get out the violins.
Any sense of history is limited. Said CNNMoney: "Both incentives are similar to programs GM has used before. In the fall of 2009, GM (GM, Fortune 500) offered 60-day money-back guarantees on vehicles from all four brands it now sells in the U.S., Chevrolet, Buick, GMC and Cadillac."
Uh, don't forget that Saturn was famous for a return policy. It was so ineffective that they narrowed it over the years and the rest is bankruptcy history.
CNNMoney also fails to mention Toyota(TM) . That's essential as GM's illusionary comeback was a function of Toyota's natural-disaster-induced production problems. With Toyota roaring back, GM has turned wounded, desperate and wholly reactive.
Instead of skipping over Toyota altogether, Bloomberg Businessweek got right to the top cause of GM's pain in their lead. The Wall Street Journal did well to highlight the swelling amount of time, which far exceeds the industry average, it takes to sell a GM car.
GM is doing something fairly unusual here, but it's out of a gathering level of desperation. That's an essential distinction, at least if you want to understand the predicament that is GM.
At the time of publication, the author had no positions in any of the stocks mentioned.