This is a rush transcript from "Your World With Neil Cavuto," September 14, 2009. This copy may not be in its final form and may be updated.
NEIL CAVUTO, HOST: Well, you don't like it, after you drive it, you don't have to keep it — GM putting its marketing pedal to the metal with a 60-day money-back guarantee. Kick the tires, push the tires, and, after 60 days, you still don't like the tires or the car attached to them, no problem, no car, no charge. With me now, GM vice chairman Bob Lutz.
Bob, why are you guys doing this?
BOB LUTZ, VICE CHAIRMAN, GENERAL MOTORS: Well, we need to overcome the resistance on a certain segment of the American public who simply have not gotten the word on how great our — our new product program is, how many car of the year awards we have won, what our quality or fuel economy is.
This is a way to try to break through and get over some of the negative perceptions of General Motors and actually get people more comfortable about coming in to a GM dealership, trying a car, comparing it to competition. And, of course, the 60-day satisfaction guarantee is also combined with our five-year 100,000-mile power train warranty...
CAVUTO: Right. Right.
LUTZ: ... which we will also be emphasizing that at the same time.
CAVUTO: But, Bob, let's say — and I know you don't want — envision this happening, but you never know — that a good many of those folks don't like the car, for a variety of reasons, and, within 60 days, return it.
And, then, all of a sudden, you are stuck with an inventory of a lot of cars whose residual value has just gone down at 30 percent. I think, when I buy a new car and I leave the — you know, the lot, it is down 80 percent or something like that.
CAVUTO: But my point is — with all respect, my own point is, do you risk that? Do you risk...
LUTZ: Well, listen, if we thought that was going to happen, we wouldn't be offering it.
And this same type of thing was once tried by a GM subsidiary in the U.K. called Vauxhall.
LUTZ: The percentage of people who bring the vehicle back is under two percent. And the abuse percentage — that is, those who want a free — kind of a free two months with a Chevrolet Corvette or Camaro — that is even lower. That's way below half-a-percent.
CAVUTO: Really? You don't think people — so, this is going to apply to the Camaro?
LUTZ: It applies to everything.
CAVUTO: Well, come on then, Bob. I'm who is not going to want to take — a teenager will hear this...
LUTZ: Hey, listen, Neil...
CAVUTO: ... or a guy going through a sort of his second act, and then, in 60 days, I have got a red Camaro.
LUTZ: The teenager has to have a good credit history. He has got to make a down payment or — or he's got to pay cash.
LUTZ: He has got to be current on his payments. The vehicle has to be returned undamaged. So...
LUTZ: ... I think we have a lot of safeguards. And I don't think many people are going to make that huge up-front commitment for a 60-day joyride. And — and the ones that may have that tendency, I think the dealers will be able to weed them out.
CAVUTO: You hope so, because, you know, I — the — the question with GM, as you know, Bob — and you've been asked this many times — is that you are doing this on our dime. We have given your company a lot of money to turn around, and most — and many folks are optimistic that — that you can and you will, but there are a lot of other folks who are not, and think that this kind of a marketing strategy, while it might be very, very novel, is going to end up being footed by taxpayers, with little result.
What do you say to them, the doubters?
LUTZ: Well, what — what I say to that is that it was primarily the government-appointed board and its chairman, Ed Whitacre, who very wisely said, you guys have the best product program in General Motors history. You can meet or beat the specifications, fuel economy, ride handling, design, et cetera, of any brand — any equivalent brand out there.
LUTZ: What are you going to do to tell the world? And we said, well, you know, we are operating on a budget. And, basically, Ed Whitacre said: I don't want to hear about budget. I hear about what it gets to take — what it takes in terms of communications to get the job done.
And he is absolutely right, because we have invested...
CAVUTO: Well, but what does Ed know, Bob? And I know you live and breathe cars. You have come up with some of the most impressive models we have known.
But — but Ed knows phones. He comes from AT&T. And God bless him, a very smart guy, but I'm wondering, as someone who just — you know, this guy was brought in, and he knows phones and long distance and wires and calling plans.
CAVUTO: But he knows — what does he know about what you're doing?
LUTZ: He doesn't know cars very well. He's the owner of three GM cars, but he has — he has read up on it. He has read the magazine reviews. He knows how many car of the year awards we have won. He knows how we stack up against Toyota and...
LUTZ: And what...
CAVUTO: I know, but shouldn't a CEO do more than just read a few magazines...
LUTZ: No, no, he is not the CEO. He's only the chairman.
CAVUTO: But you know what I mean. You know what I mean.
LUTZ: But he understands the power of communication. That is what — that's what he used to transform the power of AT&T and get customers back to AT&T.
And he realizes that, right now, at this juncture in our history...
LUTZ: ... the substantial sums that we are spending in a very effective and very provocative campaign to get more Americans to wake up to the reality of the new GM products, which you very kindly mentioned, that is the best way to spend some of the government's money right now.
CAVUTO: All right. I hear you.
Bob, very good having you on again. Thank you very much.
LUTZ: Thanks a lot, Neil.
CAVUTO: All right, Bob Lutz.
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