Will Auto Loans Be Enough?
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by: laurawilder
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The automobile manufacturers in this country have fallen on difficult times. Both Chrysler and General Motors have been in Washington DC to request government loans to help them get back on their feet. They hope a loan will help them avoid layoffs and liquidation. The long term shock waves could affect car dealership, car accessory manufacturers and auto shops. Despite strong indications over the years that the American auto makers should shift focus to more energy efficient and smaller cars, their slow response to change left them behind foreign competitors. Recent economic developments hit the already struggling GM hard. In addition, consumers are now more reluctant to jump into auto loans, financing and new car purchases.
GM is undertaking various incentives to entice consumers into buying from them. It is currently broadening their employee discount program, as well as giving rebates for new car buyers. One program even allows dealers and current and retired employees to offer employee discounts to friends and family. GM also announced a joint venture with credit unions in the Midwest to offer discounted auto loans to consumers. "Invest in America" is the appropriately named venture. It will offer lower interest rates on auto loans and significant discounts on the retail prices of GM cars. It is estimated that the venture will offer $10 billion in auto loans to consumers. Currently, the auto loans and discounts will be offered in a handful of states in the Midwest, but it is expected to branch out to other states. Additional auto loans and great deals may abound in 2009, as speculation circulates that the other two big auto makers are discussing a similar deals with credit unions.
History will be the judge of whether consumers will be enticed enough by low interest rates on auto loans and good deals on new cars to help jump start sales for the ailing auto industry. The big three auto makers are counting on the federal government, consumers and changes to their business models as a lifeline for their companies. American car makers, once symbols of the power of the industrial revolution, now have to face the music after years of business as usual. The crises these companies are confronting will cause them to change or disappear. For the sake of the many employees in car manufacturing and its related industries, let us hope it is the former.
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