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GM Tests a Return Program

April 08, 2005|From Times Wire Services

General Motors Corp., trying to reverse a U.S. sales slump, is testing a plan in California and five cities that lets people who lease select GM cars return them if they're not satisfied, according to two reports.

Customers who lease the Buick LaCrosse, Chevy Cobalt and Pontiac G6 from April 5 to June 30 in California, Atlanta, Baltimore, Washington and Providence, R.I., will be able to return them within the first 12,000 miles, according to the Detroit News and, an auto-incentive website.

Deb Silverman, a spokeswoman for the world's largest automaker, wouldn't comment on GM's "Freedom Lease" program. "We do pilot programs all the time," she told the Detroit News.

"This is consistent with their thinking that if they can get people to sit in their cars, they might like them," said Alan Baum, director of automotive forecasting at Planning Edge, a consulting firm in Birmingham, Mich.

The Lacrosse, Cobalt and G6 went on sale last year and reflect GM's desire to rebuild car sales after focusing on truck products. GM's U.S. sales fell 5.2% in the first quarter and North American production was cut 12% as Toyota Motor Corp. and other Asian automakers increased U.S. sales, market share and production.

The offer is only available to customers who make a nonrefundable $1,500 down payment and meet certain credit requirements, according to the reports.

Customers must make payments until they return the car.

Rob Hinchliffe, an analyst with UBS Securities in New York, wrote in a March 28 report that new products from the automaker such as the G6 and LaCrosse were generating less consumer interest than competitors' new models, such as Chrysler's 300 sedan.

Seven GM models place among the top 10 spots in a UBS survey that asked auto dealers which new products would be flops, Hinchliffe wrote. The LaCrosse led the list.

Shares of Detroit-based GM climbed 67 cents to $30.53 on the New York Stock Exchange.


Bloomberg News was used in compiling this report.

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