The General Motors plan to switch 128,000 1977 Pontiacs, Buicks and Oldsmobiles with Chevrolet V-8 engines for new cars could cost local dealers across the nation hundreds of thousands of dollars in unreimbursed expenses.
But the owners and managers of Washington area car agencies are betting that few customers will choose to participate in the exchange, opting instead for a special warranty on their present model.
"Frankly I don't feel that too many people are upset with having a Chevrolet engine in another GM car," said Henry Gay, general manager of Mid-City Chevy-Olds of Laurel. "I've only had one complaints out of the 100 or so Oldsmobiles I've sold and I'd have had that many complaints if they had all been Olds mobiles engines.
Under the plan disclosed by GM yesterday, the auto makers will pay its dealers a $300 rebate on every exchange. The dealers also will be able to credit against the new car price an 8-cent-a-mile use fee charge for every mile the car has traveled since its purchase. The car owners participating in the switch would also have amounts deducted for unusual wear or damage to the engines of their current car.
If owners do not wish to exchange their cars for new models, they will be given a special performance warranty covering the entire power train (engine, transmission and rear axle) for 36,000 miles or three years, GM said.
All the dealers queried in an informal survey yesterday agreed that the rebate, use and damage credits will not cover their costs in exhanging a new car for what would now be a used car.
"I will have two or three times the expense over what the factory is willing to pay," said Joseph Paul, an owner of Paul Bros., Inc. at 5220 Wisconsin Ave. NW.
"We're going to give a new car and we're going to get back a used car," he said. "Obviously we're goung to lose money. But I'm sure General Motors has worked out a good plan as it always does. We're willing to go along with whatever will placate a customer who's upset. I think only about one person in 10 is excited about this whole thing though."
Jack Winegardner of Pohanke Oldsmobile in Marlow Heights termed the GM plan "equitable and fair." He said the rebate should cover his costs, unless he is swamped with customers wanting an exchange.
As Gay explained, many dealers are unpreturbed by the Detroit scheme because it appears that customers would be wise to choose the warranty rather that the replacement option.Major difficulties for dealerships would arise, however, if every customer involved opted for replacement.
"If a dealer sold a thousand cars with Chevrolet engines and he had to take them all back, he'd be in trouble," Gay said. "Aside from the financial loss, what would he do with 1,000 used cars to sell? Where would he put them?"
General Motors will notify owners of the cars involved by mail and direct them to contact their local dealer if they want a replacement. Prior to 1977 GM engines were color-coded by division, which would have permitted purchasers to determine if they had a Chevrolet engine simply by looking under the hood. The old color system, with some exceptions, was blue for Chevrolet, red for Oldsmobile, green for Buick and Purple for Pontiac.