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. 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 long term shock waves could affect car dealership, car accessory manufacturers and auto shops. Car makers in the Unites States have been sluggish in adopting changes that left similar foreign car makers ahead of the game. 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. Some credit unions have joined forces with GM to provide auto loans at lower rates. "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. 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.
Time will tell if offering consumers discounts and great rates on auto loans will be enough to give American car companies the boost in sales they need. The major U.S. car manufacturers are hoping that a combination of boost in sales, modifications to their business strategies and a loan from the government will be enough to help them out of troubled waters. 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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