Thursday, April 7, 2005

GM tests lease return option

New attempt to jolt lagging sales of three new cars will be tried in select regions.

By Ed Garsten / The Detroit News

A really long test drive GM’s "Freedom Lease" pilot program allows customers who lease a Chevrolet Cobalt, Pontiac G6 or Buick LaCrosse to return the car within the first 12,000 miles if they are not satisfied, with no further obligation. Will that make you more likely to lease one of the cars? Yes No Get results and comments Comment on this story Send this story to a friend Get Home Delivery

Desperate to jump start sagging sales of three of its most important new products, General Motors Corp. is offering lease customers in some parts of the country the chance to return the cars if they're not satisfied.

The pilot program, called Freedom Lease, runs through the end of June in California; Atlanta, Ga.; Boston, Mass.; Providence, R.I.; Baltimore, Md., and Washington D.C.

Customers who lease a Chevrolet Cobalt, Pontiac G6 or Buick LaCrosse can return the car with no further obligation if they do so before they've driven 12,000 miles, according to a memo GM sent to dealers obtained by The Detroit News.

A $1,500 down payment made in cash or trade would be forfeited. The deal is not open to GM employees.

If the program is successful, GM may consider making it available in more areas.

GM spokeswoman Deborah Silverman declined to confirm details of the plan, but said "we do pilot programs all the time."

Sales of the three vehicles have been disappointing, in part, because lukewarm reviews have cooled consumers' desire to test drive the cars and they face stiff competition in the small and midsize car segments.

"It's a great idea to get people to actually drive these three new products," said Mark McCready, director of pricing strategy at Carsdirect.com, an online vehicle buying guide. "GM cannot get people in showrooms to drive these products."

The risk, McCready said, is that consumers won't like the cars and will return them.

He said GM is the first automaker to try such an offer, but Mercedes-Benz dealers have used it successfully in the past.

Ford Motor Co. spokesman David Reuter said the nation's second biggest automaker isn't likely to match GM's offer.

"With new product like our Five Hundred, Mustang and Freestyle, we're having success by selling on the goodness of the core product -- without incentives," Reuter said. "That is what impresses customers."

GM's move comes a day after it revived its Hot Button vehicle giveaway. Under the program, which first ran last year, GM will give away 1,000 new vehicles to customers who come into showrooms and hit the OnStar button in designated vehicles to find out if they've won.

This time, the company is sweetening the deal by offering $1,000 rebates on all vehicles sold during the promotion, which runs through May.

At the urging of its dealers, GM has tried a number of novel sales promotions, including 24-hour test drives, that aren't based entirely on big money rebates and cut-rating financing.

The automaker is trying to stoke demand to reverse U.S. market share losses to foreign rivals. Through March, GM's portion of the American car and truck market fell to 25.6 percent, compared to 26.8 percent last year.

"Anything they can do to take away the rebates and stuff is a good thing," said Bob Ashworth, sales manager at Braley & Graham Buick-Pontiac in Sacramento, Calif. "They've driven some business, but at the expense of the dealers. Margins are dwindling to nothing."

Last month, GM promoted former Cadillac general manager Mark LaNeve to its top sales and marketing job. LaNeve favors more targeted regional programs tailored to specific markets over sweeping national promotions.

You can reach Ed Garsten at (313) 223-3217 or egarsten@detnews.com.