Auto Loans for the Beleaguered Industry
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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. Without a loan, they risk going bankrupt and laying off thousands of workers. 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. Some credit unions have joined forces with GM to provide auto loans at lower rates. "Invest in America" is the appropriately named venture. The venture will give consumers deals on GM models, as well as low rate auto loans. 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. 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 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. 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. 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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