Can Discounts and Auto Loans Get People Buying American Cars?
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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. Although GM was already in some financial trouble, the crises in the credit industry and downturn in the economy dealt it an even bigger blow. Getting consumers to purchase cars and take on auto loans is now more difficult, given the recent increase in gas prices and the economic slump.
While GM hopes to receive the federal bridge loan, it is also taking steps to encourage consumers to purchase their cars. The company is offering big cash rebates for customers and has expanded its employee discounts. 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. Approximately $10 billion will be tendered in auto loans for car buyers. The deals and auto loans will begin in the Midwest, and are anticipated to expand to the rest of the country. 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. The once almighty big three auto manufacturers are now analyzing the business models of foreign car companies to chart a course ahead. The crises these companies are confronting will cause them to change or disappear. Hopefully it is not the latter, as the affects would be devastating to so many associated businesses and workers.
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