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General Motors' Chevrolet brand offers refund to new-car buyers

Chevrolet's offer for 2012 and 2013 model-year vehicles lets buyers return cars for a full refund as long as they have fewer than 4,000 miles on them.

July 11, 2012|By Jerry Hirsch, Los Angeles Times
  • Under Chevrolet's return program, drivers won’t be charged for the miles the put on the car but they will have to wait at least 30 days before they can return it. Above, a line of 2012 Chevrolet Cruze sedans sit at a dealership in Englewood, Colo.
Under Chevrolet's return program, drivers won’t be charged… (David Zalubowski, Associated…)

Don't like your new Chevy? Take it back for a refund.

In a move that makes car buying akin to shopping for shoes at Nordstrom, Chevrolet's Love It or Return It offer will allow new-car buyers to return vehicles for a full refund as long as they have fewer than 4,000 miles on them.

Buyers who choose to return a vehicle will get their money back, including what they paid in sales tax on the vehicle. They will still incur some expenses such as any other taxes, licensing and registration fees and extras such as extended warranties.

Drivers won't be charged for the miles put on the car, but they will have to wait at least 30 days before they can return it.

"If you don't drive the car that long you are not really giving it a fair chance," said Afaf Farah, a Chevrolet spokeswoman.

The offer is part of a new marketing program that also includes no-haggle pricing. It's targeted at clearing out Chevrolet's remaining inventory of 2012 vehicles as it transitions to the new model year.General Motors Co., which owns the brand, also hopes the promotion will help it reverse a market-share drop by Chevrolet this year.

The return program is good on new 2012 or 2013 model-year vehicles. The promotion runs through Sept. 4. It's not the first time Chevrolet has made this kind of offer.

The brand offered a buyback program for an 11-week period in late 2009 as it sought to boost sales coming out of its bankruptcy restructuring. Only 400 buyers, or fewer than 1% of the Chevrolet purchasers during that period, returned their vehicles.

Hyundai Motor America offered a refund program when unemployment shot up in 2009 and auto sales slumped. That refund could be obtained within a year of the car's purchase, but it was not open to all consumers.

The deal covered as much as $7,500 in price depreciation on Hyundai-financed or leased vehicles for customers who lost their jobs, lost their driver's licenses because of physical disabilities or had international employment transfers.

Just 300 buyers took advantage of that offer.

But auto consultant Bob Martin of CarLab in Orange said it was an important symbol. It "set them apart as a car company doing something during a time of need for customers," he said. "But just because it worked at one car company doesn't mean it will work at another."

The Chevrolet plan appeared to be rooted in GM's belief that its cars weren't getting the market share they deserved, especially in import-oriented markets such as California, analysts said.

Chris Perry, Chevrolet global vice president of marketing, said the money-back guarantee will nudge people to try one of the cars.

"Research has shown customers respond positively to the confidence companies demonstrate with programs like this and appreciate the peace of mind that comes with knowing they have the option of being able to return their vehicle," Perry said.

The other part of the Chevrolet promotion — discount pricing that does away with the ritual car-buying negotiations — could have a bigger effect on sales.

"Many consumers like no-haggle pricing because it's a giant headache and scares a lot of consumers, since most people only haggle when acquiring two assets — real estate and cars," said Rebecca Lindland, an analyst at IHS Automotive.

It's also an efficient way to sell cars, Lindland said. Sales staff won't be tied up for long periods haggling on a price with one client, leaving them free to move on to the next potential buyer.

Buyers will get the same price General Motors offers to suppliers.

The discount is not as deep as those offered to the manufacturer's employees — a previous promotion extended to all consumers — but it should help bring buyers to showrooms, said Jesse Toprak, an analyst at TrueCar.com, an auto price information company.

"Similar programs have been quite successful in the past, and we expect Chevrolet to get a decent boost from this promotion for the next couple of months," Toprak said.

The pricing deal cuts about $600 to $700 off the sticker price of a moderately equipped Cruze subcompact sedan and about $1,000 off a similarly equipped Equinox sport-utility vehicle.

Some buyers of Chevrolet models have received better deals in recent weeks, according to closed transaction data reported by TrueCar.com. Moreover, many of the discounts offered in the new program reduce the price of the car to about its average transaction price prior to the GM sales initiative, according to the data.

Chevrolet has sold 961,662 vehicles in the U.S. through the first half of this year, a 6.3% gain from the same period last year, according to Autodata Corp. During the same period, the overall auto market has grown by more than double that rate, 14.8%.

The brand has lost market share to Toyota, Chrysler, Jeep and Volkswagen nameplates. Through the first half of this year, Chevrolet had 13.2% of U.S. auto sales, down from 14.3% a year earlier.

jerry.hirsch@latimes.com

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