Sunday, January 15, 2006

Auto Industry

GM has notified the Public they are going to introduce the Cost-Savings program ahead of schedule, due to the softness of Consumer demand for vehicles. There has been planned 'force-fed' program in the Past, to entice Consumers to purchase ahead of their own personal Consumption schedules. This Author does not know the details of the GM plan, but estimates it will not go far enough to bring in the Buyers and leassers. An economic evaluation should be made.

The criteria of Consumers is the cancellation of risk. The Car Companies fail to provide 'Fail-Safe' protection for Consumers. Expenses are killing the Consumers, and Risk has become more hazardous. The Car companies have a distribution and Retail problem. A meeting of the Minds may be necessary.

A suggested Protection Plan:

1) Companies assume the Auto insurance for Consumers, negotiating by Group insurance, more adjustable and affordable Rates. The Cost would be added to the monthly payments.
2) The current Warranties program be replaced by guaranteed Maintenance Monthly charges, where Car companies collect a monthly payment per month, and themselves pay all Maintenance charges (including Oil changes, Tune-ups, and Fluid replacements) on the vehicles for a lengthy period.
3) Vehicles should be guaranteed this protection for 10 years.
4) Consumers are guaranteed a Used Car replacement when their vehicle is in Maintenance for Accident or malfunction, and a Used Car replacement if an Accident or malfunction has functionally ended the vehicle life.
5) The Consumer is guaranteed a Resale value through 10 years, no matter what condition the vehicle is in, if the Maintenance record was fulfilled.

This Program may seem expensive, but Car companies could charge Rates which would make this Program quite profitable, by limiting Insurance and Maintenance Costs. It would generate Brand loyalty, and force other Companies to match Resale guarantees for vehicles. Car companies can assure the Customer that they will stand behind their Product, while Consumer satisfaction with any one vehicle can be turned into a new Purchase; Salesmen able to concentrate on the really mild increase of monthly payments (likely none, if Car companies are smart, just the initial Down Payment). lgl

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