Why Returnable Cars Haven’t Caught On
In the view of many consumers, a car, like other goods, should be returnable. It’s a big purchase, full of details and fraught with uncertainty, sometimes including problems on delivery and seemingly endless “adjustments” thereafter.
Amazingly, car makers have responded. Chrysler, Pontiac and Oldsmobile have recently made it possible to return some of their cars at least some of the time.
But a customer service that should have been greeted with cheers has barely been noted. Perhaps it’s not what consumers want, or it wasn’t offered right, or perhaps nobody, consumers included, really understands what sells cars.
Chrysler started with limited tests in individual cities half a dozen years ago. Then, for several months in the fall of 1988, Chrysler buyers in Washington were offered their money back on cars returned within 30 days or 1,000 miles, while buyers in Denver and Chicago could exchange them for another car, for any reason, as long as the car hadn’t sustained more than $300 in damage.
That same fall, General Motors’ Pontiac division, having tested a similar program in California with its Grand Am model, offered nationwide to exchange any 1989 Grand Prix within 30 days or 3,000 miles. And last September, GM’s Oldsmobile division introduced the “Oldsmobile Edge,” a “customer satisfaction program” including, among other benefits, the right to exchange any new Olds within the first 1,500 miles or 30 days.
Such programs convey the message that “we stand behind the product,” says Mike Losh, Oldsmobile’s general manager and GM vice president. “Our products are better than five years ago, and this is a very graphic way of telling people.”
It’s also a message these manufacturers thought consumers would welcome. Pontiac’s market research, for example, indicated that more than 85% of households would be more likely to consider a car with that guarantee than one with other “inducements,” such as rebates and low financing.
Trouble is, no one seems sure whether the programs were successes or failures, or how to interpret the results. Actual returns were few--less than 1% of Chrysler’s sales during the periods covered, less than one-half of 1% of Pontiac Grand Prix cars sold that year and of Oldsmobiles sold in that program’s first three months.
These numbers are taken as proof of product quality, because the reason for most returns was not mechanical problems but customer taste, a simple change of mind. Typically, say dealers, cars came back because someone disliked the color, or the model seemed too small for the family.
There’s some disagreement, however, among car dealers (who were compensated for any financial losses) about the consumer’s view of such programs and about whether either traffic or sales were increased at their dealerships. Some say customers weren’t aware of the program, which lasted in some areas for only a couple of months. Others thought customers were well aware; they even joked, says Bill Haeger, owner of Des Plaines Chrysler/Plymouth in Illinois, warning that “if you don’t make me happy, I’m going to bring it back.”
At Pontiac, “few took advantage of (the program), and few said it was important to them,” says Sheila Main at Pontiac in Michigan; when asked, buyers said it was neither their primary nor their secondary reason for purchase. At Oldsmobile, however, only 11% of November’s showroom visitors may have been aware of the program, but of those, says Losh, “roughly half indicated it was a factor in bringing them in.”
Among dealers, Chrysler’s Washington experiment--the money-back offer--was probably least popular, considered “a little strong,” laughs Mike Haeger at Des Plaines Chrysler/Plymouth. But some thought the exchange program--extended several times in some areas--an asset. Others thought it “an interesting selling tool,” says Chrysler spokesman Tom Houston, “but not much more. It was well received but didn’t result in a stampede.”
No one’s sure why not, given consumer complaints about new cars. Were the test programs so limited and poorly publicized that they don’t really prove the consumer’s lack of interest? Were returns few just because the process of choosing and taking title to a car is so arduous that no one wants to do it twice, or do aggravating mechanical problems surface only after the first month?
Perhaps new car shoppers voiced no particular interest because they’d already chosen a specific brand. They “came in to buy a Pontiac,” says Main, “and were going to buy one anyway.” Many, adds Chrysler dealer Jack Bosak in Merrillville, Ind., “came in for a specific model,” although some traded up when there.
Of the “one-third of the people in the market for a car who aren’t model-specific,” says Stanley Plog, head of a Reseda-based marketing research firm, “how many can you grab their attention, and how many will think it’s a legitimate offer? There’s so much distrust, and people may worry that it’s not that easy to get in or out (of the deal), that there are probably a lot of gimmicks.”
The test results may also be skewed by the fact that the market is tired right now, overstocked and over-promoted. Sales are off industrywide, and the number of people in the market for new cars is, says Plog, the lowest in three years. It would take more than an exchange program to boost sales.
The real news is in Oldsmobile’s stated view that its return policy is a long-term commitment, not just a brief promotion. “We think it’ll work even better over time,” says Losh, “not just to draw people in but to make sure they come back. Our aim is to provide a good, comprehensive ownership experience”--the return policy, 24-hour roadside service, perhaps eventually loaner cars and other services.
Nothing more and nothing less than customer service--this is a radical idea in the auto industry, and one that deserves attention. If consumers really want what they say, Olds could indeed have an “edge” in the market.
