GM – Lease with Option to Buy

The new CEO of GM makes us a guarantee, essentially extending “Cash for Clunkers.” That guarantee is that if you buy a GM and you don’t like it, then you can bring it back after 60 days.  Cool!

Allow me to translate:  GM is spending our money to sell our cars back to us.  But first, GM is going to lease us cars we already own.  The good news is you will have the option to buy it…a second time! See what GM thinks in this statement:

“We’re putting our money down that if people buy one of our vehicles and don’t absolutely love it, we’ll take it back,” Bob Lutz, GM’s vice chairman of marketing, said in a statement.The campaign marks GM’s efforts to rebound after a 39-day, U.S.-steered bankruptcy and a $50 billion federal bailout. GM, which is shedding half of its U.S. brands, will try to rebuild a U.S. market share that has fallen to 19.5 percent this year from a peak of 50.1 percent in 1962.

The plan:

• Covers Chevrolet, Buick, GMC and Cadillac models for the 2009 and 2010 model years.

• Allows customers to return their cars after 31 days and before 4,000 miles.

• Does not cover leased vehicles.

“Three or four years ago, this would have been a huge risk,” Lutz said during a conference call. “We are now so confident of our vehicles, we can afford to take this risk.”

Risk?  I’d say that having $50B in the bank at the expense of the taxpayer helps to mitigate that risk just a bit!  Risk is more like what millions of entrepreneurs do every day without government backing, and not having Big Brother there to extort its citizens at their whim.

As for the quality of GM, I’m happy that Ed Whitacre believes GM has made such a dramatic turnaround in only a few months, however I remain a bit skeptical.  When I think of the best made automobiles, I’m sorry to say GM isn’t in my top three.  I predict that GM will get back a lot of used vehicles after 60 days, and the public will be forced to pay for another group of clunkers in yet another government-subsidized sale.

Oh, and if you think that you will be getting your car “pimped up”, think again.  It doesn’t include add-ons, as it says in the guarantee:

“The Satisfaction Guarantee covers the vehicle purchase price and sales tax, but not other add-ons like accessories, negative equity on a trade-in or other fees; other restrictions apply.”

Here’s the wrap:

government_motorsThe previous cash for clunkers propped up the GDP for August, so why not a new approach to fleecing the taxpayer that will help the GDP in the Nov/Dec timeframe.  And just in time for the lousy Christmas season inevitably to come.

If this newfound exuberance were private-sector, I would warn the CEO about getting too cocky.  Obama doesn’t like anybody into “exceptionalism.” However because GM is now Government Motors, Whitacre might actually be able to pull this off!  After all, the Fed is always ready to step in and bail out the UAW with taxpayer money.  All it takes is socialist in charge and a Democrat Congress.  Now that GM is Government Motors, they are certainly too big to fail!

That’s my rant!

© 2009 Kevin Jackson – The Black Sphere All Rights Reserved

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