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How General Motor’s Money Back Guarantee will create more lemon cars in the demo and used car market

At the end of the day, it’s all a numbers game. For future demo or used GM car buyers, the number might not be in your favor. Here’s why…

General Motors’ new money-back guarantee will most likely attract many consumers and new car buyers between September 14 – November 30. After the wave of car purchasers drive the vehicle for 31 to 60 days, a percentage of these folks will take advantage of the money-back guarantee program and return the vehicle (sometimes between October 15 through December 29).

The reasons for returns, like electronics, may vary from preference (nothing is wrong with the vehicle) to defects (the vehicle’s engine is sputtering black smoke and it’s been taken back 4 times for repairs). Unlike returned electronics, GM has been silent and has not mentioned any refurbish or product re-certification program.

In other words, cars returned from the money-back guarantee may or may not have a “refurbished” sticker on them. They will join the inventory of other used cars and there will most likely be a flood of used cars on the market by December or January.

Another indirect problem this will create points to simple economics. More supply equals less demand and decrease in price. In other words, with the saturation of used GM cars on the market, depreciation will probably be worse than it ever will be.

If you are think that used cars are protected under the Texas Lemon Law program, then think again. The protection is very limited and often times, not very advantageous for the consumer.

I hope my projections are wrong. If it is not, then it appears that GM’s money-back guarantee program might be a lemon program.

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