Partnership to Offer Auto Loans and Discounts
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by: laurawilder
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Car makers in the United States are in dire straights. Two of the biggest auto manufacturing companies, General Motors and Chrysler, have been on Capitol Hill asking for loans to meet their operating expenses for the next quarter. They hope a loan will help them avoid layoffs and liquidation. The effects could trickle down to auto parts suppliers, dealers and mechanics. 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.
GM is undertaking various incentives to entice consumers into buying from them. The company is offering big cash rebates for customers and has expanded its employee discounts. The employee discount program is so broad that family members and friends of employees can often get in on the deals. GM also announced a joint venture with credit unions in the Midwest to offer discounted auto loans to consumers. The partnership is called "Invest in America." 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. The deals and auto loans will begin in the Midwest, and are anticipated to expand to the rest of the country. It is rumored that the Michigan Credit Union League is in talks with Chrysler and Ford, as well, which could mean that more auto loans and discounts could be available to consumers.
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. American car companies must adapt to the changing times or close up shop. Hopefully it is not the latter, as the affects would be devastating to so many associated businesses and workers.
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