GM, Ford join payment protection trend

A lack of consumer confidence is cited as the primary reason auto sales are running at their lowest rate in nearly three decades.

But new buyer-assurance plans offered this week by General Motors and Ford Motor Co. are designed to give customers the confidence they need to buy new vehicles by offering to make their payments if they lose their jobs because of layoffs.

Hyundai Motor America offers a similar plan, which lets new-vehicle buyers return cars free for up to a year if they lose their jobs or become disabled and can’t make their payments.

The GM Total Confidence program gives buyers payment protection for the first two years of ownership, the automaker said. Under the plan, GM will make the payments for a laid-off worker for up to nine months, with a limit of $500 per payment.

Ford’s program, the Ford Advantage Plan, guarantees to make the payments on a new-vehicle purchase for up to a year —- with a $700 limit on the amount of the monthly payment —- if the customer loses his job.

In addition, Ford is offering no-interest financing on “select” vehicles as another way to increase sales and to give consumers a price break.

Consumers remain anxious about the economy and their own outlook for the future, Ken Czubay, Ford’s vice president for sales and marketing, said in announcing the program. “We at Ford want to do our part to rebuild faith in the marketplace by offering payment protection on every new Ford, Lincoln or Mercury vehicle for up to a year if our customers lose their jobs.”

The Ford program will continue until June 1, the automaker said. But it could be renewed if the company sees that it is helping to restore consumer confidence and to boost sales of Ford Motor Co. vehicles.

GM’s program goes further than Ford’s, however, by guaranteeing the value of a new GM vehicle when a customer gets ready to trade it in for another one.

Called Vehicle Value Protection, this provision “helps protect customers against uncertainty in the future used-car market,” GM said.

Once customers are halfway through making the payments on their new GM vehicles, they will qualify for the program, which assures them that their trade-in vehicle will be worth at least as much as they still owe on it.

“For example, on a 60-month contract, you become eligible after the 30th month,” GM said. “Much as we’ve seen home prices decline in this tough market —- and homeowners may owe more than the current resale value of their house —- Vehicle Value Protection provides peace of mind for customers when they want to go purchase another GM vehicle.”

GM also is offering a full year of OnStar service free, and it also has one of the best powertrain warranties in the industry. The powertrain —- which includes the engine and transmission —- of any new GM vehicle is covered for five years or 100,000 miles, whichever comes first, with roadside assistance and courtesy transportation included.

The automaker has a new Web site, GMconfidence.com, designed to give information about the new program.

“By protecting a customer’s payment, investment, vehicle and family, we are reinventing the customer experience,” said Mark LaNeve, GM’s vice president for North American sales, service and marketing. “The GM Total Confidence plan addresses today’s most pressing concerns for new-car buyers. We asked customers what they wanted, and simply put, this package is it.”

The Hyundai Assurance Program applies to customers stricken by misfortune beyond their control and covers depreciation up to $7,500.

That program already has helped boost Hyundai’s sales. The South Korean automaker’s January sales were up 14 percent from those of the same month in 2008. That was the first full month of sales after the buyback plan was announced in December.

At GM and Ford, January sales were off 29.9 percent and 42 percent, respectively.

Ford also is touting the fuel-economy and quality of its vehicles.

“When selecting their next Ford vehicle, customers also can take comfort in knowing that Ford’s newest vehicles are the best or among the best in fuel economy and cost of ownership,” Czubay said.

“The Ford Fusion and Mercury Milan are America’s most fuel-efficient midsize sedans, and the Fusion has a higher residual value than the Toyota Camry after three years of ownership, according to the Automotive Leasing Guide,” he said.

Additionally, the redesigned 2009 Ford F-150 received a residual-value award from the leasing guide for retaining the highest percentage of its original price among full-size, light-duty pickups at the end of a conventional three-year lease, based on the guide’s predictions, Ford said.

And in the most recent J.D. Power quality study, Ford’s overall ranking was on par with Toyota and Honda.