GM RETHINKS COSTS IN GOLD CARD REBATE ON NEW VEHICLES

By Published on .

Most Popular
General Motors Corp. is considering ways to scale back rebates of its gold MasterCard that can be applied toward new vehicle purchases.

GM is said to be planning an announcement next month of changes that won't limit the building up of credits but will put a cap on how much can be applied to a single vehicle purchase. It's anticipated GM will give cardholders a grace period before any new rules take effect.

EVALUATING PRODUCTS

Hank Weed, managing director for the GM Card, denied any decision has been made. "We constantly evaluate our opportunities to make sure we have the right product," he said.

However, other GM executives said changes are in the works because divisions are worried about the cost of rebates that could eventually climb as high as $7,000 per vehicle for a gold card holder.

"It's a question of value vs. cost," one official said.

The company introduced the original GM Card in September 1992 to build customer loyalty, and followed the "blue card" with a gold card option five months later. McCann-Erickson Worldwide, Troy, Mich., is the agency for the basic card, while D'Arcy Masius Benton & Bowles, Bloomfield Hills, handles the gold card.

5% REBATE EQUITY

Issued by Household Bank, Prospect Heights, Ill., the cards allow users to credit 5% of their charges toward a new GM vehicle. The rebate equity account can grow up to $500 a year for seven years on a basic card and $1,000 a year on a gold card.

There are a total of 9.3 million GM Card accounts, and so far 735,000 cars and trucks have been bought using rebates from the cards, Mr. Weed said.

"That's a much higher number [of rebates] than we originally anticipated," said Mr. Weed. Nevertheless, he said, the card program has accomplished its goal of bringing in a significant amount of incremental business for GM.

In this article: