In a move to reassure potential car buyers (and also to copy a successful program from Hyundai), Ford Motor Company and General Motors Corporation both announced today buyer protection plans. Let's have a look at how the three programs compare after the jump.
Payment Protection
The signature element of the three plans (Ford Advantage, GM Total Confidence and Hyundai Assurance) are the payment protection elements that will, within certain restrictions, pay a buyer's monthly payment should he lose his job.
Hyundai scored big publicity and apparently a load of good will with Assurance which offered to take the car back from the owner should he lose his job within the first 12 months of the purchase date (any depreciation above $7,500 would have to be payed for by the car's owner, a pretty unlikely scenario). Shortly after it introduced the Assurance program, Hyundai upped it to the Assurance Plus program which provided three-months payment for owners should they want keep their car. Should that person get a job and want to keep the car beyond the 12 month Assurance coverage period, he would not be expected to pay back the three payments. Hyundai imposes no limit to the monthly payment amount. However, if at the end of the three months an owner would still like to return the car, the money Hyundai spent covering the payments would be deducted from the $7,500 maximum plan benefit.
Ford's Advantage Plan provides the same 12 months of payment protection. In Ford's case though, the company will pay up to $700 per month. GM won't spring for that much per month, but it will kick in up to nine payments for up to $500 per month. But at 24 months, GM's plan lasts twice as long as the others. Neither Ford's nor GM's plan provide for any buy back of vehicles.
Negative Equity Protection
Unique to the three programs is GM's negative equity protection provision which will provide up to $5,000 to offset a negative equity situation when that customer wants to trade-in on the purchase of a new GM-brand vehicle (Saab not included). The program will provide up to $2,500 if the customer sells his car privately and wants to purchase a new GM-brand product within the following 7 days.
Ford says it doesn't need no stinkin' negative equity protection plan noting that, according to the Automotive Leasing Guide, a Ford Fusion has a higher residual value than a Toyota Camry and an Escape has more than a Chevy Equinox.
Contacts and Details
This is a necessarily broad look at the competing programs. For more detailed information on specific stipulations of the programs go to the following corporate sites. Buyer beware.
Hyundai: Hyundai Assurance
Ford: Ford Advantage Plan
General Motors: GM Total Confidence
estreka says:
01:16 PM, 03/31/09
Hyundai, as you said, scored big PR-wise with their program. Ford and GM are wise to follow suit. One thing I am concerned about though, this might drive up car prices. So basically all new car buyers are subsidizing those that lose their job.
dg0472 says:
02:57 PM, 03/31/09
@estreka
Doubtful. Hyundai I know is just shifting incentive money and paying it to a 3rd party insurance company. I'd assume GM and Ford are doing the same thing. I know that's what Kia is doing in Canada. Toyota's Canadian credit division is doing their own, program, however. But it only covers lower-priced models.
dg0472 says:
08:00 PM, 03/31/09
Update: Both sites are up and fully functional and can confirm that GM's program is through cynoSure Financial, Inc. Ford doesn't mention any third party as administering its program, so assume it's Ford's own.
tryan says:
08:25 AM, 04/ 1/09
Am I the only that's concerned that this is ostensibly how the bailout money is being used? So while it might not drive the cost of new cars up, as Estreka said, it's our tax dollars ultimately footing the bill here for GM and Ford.
dg0472 says:
06:03 AM, 04/ 2/09
@tryan
Please remember that while Ford has said it MIGHT need money, it has yet to make any specific request or receive any money.
As far as GM goes, I think you're probably among the minority in your concerns. The best use of our tax dollars is for GM to sell cars and to return to a positive cash flow. This type program has proved effective and presumably cost-effective for Hyundai, so I'd rather see this than even larger outlays for rebates.
breeze2be says:
10:46 PM, 05/30/09
YIKES
"The best use of our tax dollars is for GM to sell cars and to return to a positive cash flow."
I cannot believe that you would say that with your outside voice. That is not the best use of our tax dollars.
B2B