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Last Updated: Wednesday, 6 September 2006, 22:52 GMT 23:52 UK
GM ups warranties on 2007 models
Customer looks at a Buick model in Michigan
GM says the view of its vehicles is outdated
US car firm GM has extended warranties on selected 2007 vehicles in a bid to win back US customers, amid fierce competition from Asian firms.

The car giant has increased the warranties from three to five years or 100,000 miles, the firm said.

GM said it was trying to challenge an outdated view that its cars were not as good as Japanese cars.

The firm is trying to focus on providing quality models to consumers rather than discounts and rebates.

Soaring fuel prices in recent months have made gas guzzling vehicles - for which GM has gained a reputation - less attractive to consumers.

GM like its US rival Ford has faced stiff competition from more fuel efficient Japanese firms, and has sought ways to lure back customers.

Marketing tools

Some carmakers have used extended warranties as a marketing tool to give them an advantage in a fiercely competitive market.

Korean firm Hyundai has offered 10-year warranties since the late 1990s and has enjoyed a strong uplift in sales as a result.

In July Ford extended warranties on its 2007 Ford, Lincoln and Mercury.

GM is keen to send a signal about the quality of its vehicles at a time when many people are opting to buy foreign-made cars.

"Because of deficits 20 years ago, we're living with a perceptual gap. Perception hasn't caught up to reality," said Mark LaNeve, GM's North America, group vice president.

GM has gradually moved away from cash-based incentives this year.

Instead, it has offered deals on credit and fuel among other things.

Alliance advice

Separately, Renault has confirmed that it will hire two investment banks to advise on a potential tie-up with GM.

Renault has held exploratory talks with GM about the US giant joining its existing alliance with Nissan.

Talks about worldwide co-operation began in July and Carlos Ghosn, the chief executive of both Renault and Nissan, has said that a preliminary decision should be made next month.

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