Buying a car is something that many people look forward to. They are not excited about the amount of debt that they will go into to pay for their new vehicle but they love the prospect of having a new car in their driveway. As many people know, it is very expensive to insure a new vehicle because it is more likely to be vandalized or stolen. All financed vehicles now require that the borrower has collision or comprehensive coverage as soon as the car is driven off of the lot.
Now GM or General Motors has created an innovative way to combine auto insurance needs with selling cars. The company will now offer its customers free auto insurance coverage when they buy a GM vehicle in the states of Oregon and Washington. The program will be lasting until September 6, 2011 and many people are excited about it.
The economy is in a down turn right now. It is important for consumers to continue spending money on things such as vehicles in order to help to revive the economy. By offering free auto insurance, the company creates buzz about their company and increases their profit margins by selling more vehicles.
Most residents in Washington and Oregon buy foreign made vehicles so this is why General Motors decided to start this program in these states first. Consumers need to act responsibly and become insured so by getting free insurance through the auto insurance provider MetLife, they are in a win-win situation. They get to buy a great new vehicle and they do not have to worry about paying for car insurance premiums.
The program might be rolled out in the other 48 states. This could be a great incentive program for GM that could create a huge amount of buzz for the company. It needs to be implemented well though because the costs could soar as a result of more participants being added to the program. When you offer free car insurance to people, you never know how much their insurance premiums will be because each driver has a different driving record. The risk will be spread out because General Motors will be enrolling so many drivers but the money that they have allocated to this program may end up running out quickly.
Americans like to save money however they can and if they know that they can get free car insurance then they will time the purchase of their vehicle with the beginning of the program in their state. However, once it ends, then GM will still need to find more creative incentive programs to get consumers to buy cars from them.
Now, in order to save money on this program if it does indeed get offered in other states, then there would probably be a selection process in which the states with lower auto insurance rates would be selected first for the program. Some states such as New York and New Jersey have higher car insurance rates so it would cost General Motors more money to offer the program in those states. MetLife also benefits from the program because they will increase the number of customers that they have in the United States. Most drivers would probably consider keeping MetLife as their car insurance provider after their free insurance ends.
MetLife needs to find ways to reach out to these General Motors customers so that they are satisfied with their services so that they will tell their friends and family members how great MetLife is so that word of mouth can boost their profit margins.
Source: AOL Autos