Watchdog Group: GM Money-Back Guarantee Funded by Tax Dollars

ALEXANDRIA, Va. — General Motors’ new 60-day money back guarantee campaign seems to offer something for everyone — except taxpayers, the 362,000-member National Taxpayers Union (NTU) pointed out today.

This Sunday, General Motors launched a new marketing campaign, ‘May the Best Car Win,’ and will offer car buyers a 60-day money-back guarantee. It was broadcasted on nearly every Sunday football game.

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Perhaps a more fitting slogan is ‘Taxpayers, You Lose.’

Normally a strategy like this would be a bold move to compete in the marketplace – one that consumers and shareholders ultimately decide to reward or punish. Unfortunately, with this 60 percent government-owned company, taxpayers don’t have the option of ‘pulling out’ of GM and putting their investments elsewhere; unless, of course, they’d like to be prosecuted by the IRS and spend a few years in jail. As a pro-market organization, we would applaud GM’s gutsy approach – if only GM hadn’t rigged the market in the first place.

Given that rigged market, it’s no wonder GM can afford to offer money-back guarantees. After all, it’s got $50 billion in bailout money. And it’s probably not going to pay it back, according to a report last week from a Congressional Oversight Panel. Since the federal government owns 60 percent of GM, maybe it ought to consider offering a money-back guarantee to the taxpayers as well. Instead, with this money-back guarantee GM continues to flaunt the enormous taxpayer investment in it. According to the State of New York Banking Department, a new car loses up to 20 percent of its value the second it drives off a dealer’s lot. Should taxpayers be footing this bill for GM’s Zipcar-like incentive program?

If GM has money to burn on this type of program, perhaps it doesn’t really need the $50 billion it received from the Treasury. NTU is a nonpartisan, nonprofit citizen organization founded in 1969 to work for lower taxes, smaller government, accountability from public officials, and economic freedom at all levels. In 2008 and 2009, the group actively opposed both the automaker bailout by mobilizing its members in email alerts, conducting talk radio interviews, issuing vote alerts to lawmakers, and lobbying Congressional staff face-to-face.

Business Logic:

GM is betting that this program will spark a buzz, lead people to investigate GM brands (Chevy, Buick, Cadillac, etc.), learn about the company and cars and get them to think positive of GM again. Critics say this 60-day money back guarantee is not enough to get consumers into the dealership, and that pricing is a better incentive. Furthermore, if people decide to use this program as a long-term rent-a-car solution, GM could face a huge loss. For this reason, the car must be under 4,000 miles if you return the car.