GM to cut dealer margins, fund new ad push

DETROIT - General Motors Co will roll out a new marketing campaign next week offering consumers a 60-day, money-back guarantee on new vehicle purchases, backed by ads featuring its chairman, Ed Whitacre, sources briefed on the plans said.

In conjunction with its stepped-up marketing effort, GM will cut the profit margin its U.S. dealers make on new vehicle sales by half a percentage point, according to the sources, who asked not to be named because the plans are not yet public.

GM's North American sales chief, Mark LaNeve, has been briefing dealers on the new ad campaign and pricing changes, which were approved at a two-day meeting of the automaker's board this week in Detroit, the sources said.

LaNeve told dealers that although the changes will reduce their margins, they should expect a higher volume of sales in 2010 as the U.S. market recovers, and particularly since there are fewer GM dealers, they said.

GM emerged from a fast-track bankruptcy in July, with the help of $50 billion in U.S. government funding.

Its sales have fallen 34 percent in its home market through August and GM has lost nearly two percentage points of market share to just over 19 percent.

To counter U.S. consumer perceptions that the automaker's brands lag on quality and reliability, GM has been readying an ad campaign focused on its mass-market Chevrolet brand and featuring direct comparisons to offerings from its rivals, executives have said.

The ads will include the slogan, May the best car win, the sources said.

Some of the ads will feature Whitacre, a veteran telecommunications executive who assumed his post in July when the automaker emerged from bankruptcy, a person familiar with the plan said.

Using Whitacre as a pitchman for GM as it attempts a turnaround from financial crisis harkens back to a legendary ad campaign from the 1980s featuring then-Chrysler CEO Lee Iacocca and the tagline: If you can find a better car, buy it.

More recent ad campaigns using senior automotive executives have been less successful.

An effort to make Daimler AG Chief Executive Dieter Zetsche a spokesman for Chrysler before the unit was sold by the German automaker in 2007 was panned by dealers and failed to stem a decline in sales.