General Motors Co said on Thursday it will offer consumers a 60-day, money-back guarantee on new vehicles and roll out a barrage of new advertising over the next year aimed at winning back American consumers who have abandoned its brands.
GM declined to say how much it would spend on the stepped- up marketing campaign, but said it expected to outspend its rivals through 2010 as it buys ads to challenge the perception its cars lag in quality and fuel efficiency.
This is a big bet on the power of communication and effective advertising in changing public perception, GM Vice Chairman Bob Lutz said.
Lutz said the ads, which will run on TV, the Internet, in print and on billboards, would amount to a barrage at a time when overall advertising spending remains weak.
The initial burst of ads under the tagline May the best car win feature newly appointed GM Chairman Ed Whitacre, a former telecommunications executive who took his post when GM emerged from a government-sponsored bankruptcy in July.
Under the new money-back guarantee, GM will allow customers to return vehicles within 60 days of purchase and receive a full refund if they have driven less than 4,000 miles.
Lutz said GM would reimburse dealers for the cost of buying backs cars that are returned.
In conjunction with the new marketing effort, GM will cut the profit margin its U.S. dealers make on new vehicle sales by half a percentage point, people briefed on the plans said.
GM sales chief Mark LaNeve told dealers they should expect higher sales to make up for lowered margins because of reductions in the number of GM showrooms and a recovery in the U.S. economy, according to people who heard the remarks.
GM used a fast-track bankruptcy process to drop some 40 percent of its U.S. dealerships. At the same time, it is selling its Hummer, Saab and Saturn brands and phasing out the Pontiac brand.
THE BEST CAR WINS?
GM's sales have fallen 34 percent in its home market through August.
To counter consumer perceptions the automaker's brands lag on quality and reliability, GM's new ads will focus on its brands led by Chevrolet and feature direct comparisons to rival offerings from Japanese and European automakers.
A website set up in advance of the GM ad campaign underscores the hurdle it faces with consumers. The site -- www.thebestcarwins -- invites visitors to rank vehicle brands for fuel economy, safety and quality.
Toyota, Volvo and Honda were the most popular answers in those categories, according to the site.
GM, traditionally one of the biggest advertisers in the United States, sharply curtailed its marketing budget over the past year as it slid toward bankruptcy.
GM skipped advertising during the Super Bowl -- the most- watched event in American television -- slashed its sponsorship of events such as racing and dropped its backing for the Buick Open golf tournament.
With its new advertising, GM will drop mention of its corporate name and logo to distance itself from the negative associations with its recent bankruptcy, Lutz said.
GM is disliked for going Chapter 11, but Chevy isn't, Lutz said. People say it's the parents that went bankrupt, the children had nothing to do with it.
Some of GM's initial ads will feature Whitacre, a move that drew immediate comparisons to the ads from the 1980s featuring then Chrysler CEO Lee Iacocca, who is credited with helping that automaker bounce back after a federal bailout.
Lutz said the Whitacre ads appeared to be a hit.
He is tall and good looking, impeccably white hair with a soft Texas drawl and he limps a little bit which gives him that old cowboy look, he said. Central casting could not have done better.
Recent ad campaigns featuring auto executives have been less successful than Chrysler's use of Iacocca.
An effort to make Daimler AG Chief Executive Dieter Zetsche a spokesman for Chrysler before the unit was sold by the German automaker in 2007 was panned.
GM emerged from bankruptcy in July with the help of $50 billion in U.S. government funding and with 61 percent ownership by the U.S. Treasury.
(Editing by Gunna Dickson and Andre Grenon)