GM finds more sales through its loaner vehicle program

Article by Christian A., on December 17, 2014

General Motors has found a good way to get more people try its other models while keeping them loyal to its brands – through loaner vehicles. General Motors has been expanding its Courtesy Transportation Program. In 2013, GM added a few elements to the program to attract dealers to take part, like tying more cash to every loaner vehicle.

Likewise, dealers were given a free hand to pick the vehicles. Dealers could also apply new-vehicle incentives when the vehicles are sold out of the rental fleet. According to GM, dealers accounting for around 90 percent of Chevrolet and Buick-GMC sales now have fleets of courtesy cars -- from just 20 percent two years ago.

The program, however, excludes Cadillac, which operates a separate loaner program. Here is how the program works: GM gives dealers $500 for every vehicle they include into their loaner fleet, which GM records it as a new-vehicle sale. While GM decides how many vehicles dealers can have in their fleets, dealers are given the freedom to decide the mix.

The cars and trucks are allowed to stay in the rental fleet for either 90 days or 7,500 miles, whichever comes first. The vehicles are then lent to service customers or for interested buyers for test drives of up to three days.

The vehicles can also be rented by customers who want to drive them longer. Once a vehicle is out of the fleet, the dealer is given two $250 "service value certificates" that can be applied to any new-car sale.

Steve Hill, GM's US vice president of sales and service, remarked that the program is not only a perk for service customers but also is selling cars by providing test drives disguised as loaners.

Dealers make customers settle into the loaner vehicle by customizing some settings to their preferences. "For someone driving a 4- or 5-year-old car, psychologically, they feel like it's their car now," Hill remarked. [source: automotive news - sub. required]

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