• 27
The auto industry is in a bad sales slump, and while trucks and SUVs are being hurt particularly by fuel prices, the rest of the market has an even bigger problem. The tight credit market is making it much harder for dealers to sell you transportation, and the problem isn't relegated to just those with poor credit. Banks want higher cash-to-debt ratios, larger down payments, and then they're still charging higher interest rates on top of all that. GM's Mark LaNeve estimates his company is losing between 10,000 and 12,000 sales per month due to the credit crunch, which is close to a full point of market share.

Chrysler dealers are likely struggling even more, as the Pentastar recently removed company-financed leasing as a fall back option for those who cannot afford to buy. Chrysler's sales have been down 34% this year through August, and leasing went from 23.5% of the business to just 2%. With the latest rash of bad news hitting the banking industry in the U.S., we don't expect this trend to reverse itself any time soon.

[Source: Automotive News, sub. req'd, photo by BookMama | CC 2.0]


I'm reporting this comment as:

Reported comments and users are reviewed by Autoblog staff 24 hours a day, seven days a week to determine whether they violate Community Guideline. Accounts are penalized for Community Guidelines violations and serious or repeated violations can lead to account termination.


    • 1 Second Ago
  • 27 Comments
      • 6 Years Ago
      Uhhhh yea, no kidding.

      Gas costs more because the dollar is worth less. Why is the dollar worth less? The economy sucks because of the credit crisis, the war that we can't afford, and probably 20 other reasons.

      People can't afford new cars because the economy is bad? SHOCKING!
      • 6 Years Ago
      chevy dealer near me has "$7,000. off" on the windshileds in the lot.....got a buddy at a truck dealership un north- he's like the service manager...or was, just lost his job.

      economy seems bleaker each day.hope we can all look back at this next year from a place far better then where we're at now.
        • 6 Years Ago
        But doesn't this story simply mean that a company that has good small, and cheap cars will come out on top. It seems to me that Cruze better be a HUGE hit for GM.

        I personally always thought that Cruze is far more important than Volt, now this story simply solidified my opinion. This also means that Corolla and Civic are about to become even larger (in terms of sales) they have the 1 & 2 spots locked, who will be #3 that is the question, Focus, no way, Cruze, GM is yet to show that they can make a good small car, i guess Huyindai has a chance to make it big right now.
        • 6 Years Ago
        Welfare...I have to agree on the Cruze. But I doubt it will be a huge seller like some people say it will be....unless it's priced and equipped right from the start. GM definitely doesn't have a good past as far as small cars go...

        As for the Focus. It will do well. Surprisingly, Focus sales skyrocketed after the 08 came out. And we are supposed to be getting a new Focus within the next couple years. So you never know. The Focus isn't a bad car. Old? Yes. Good? Definitely.

        But it seems small cars and lightly used vehicles will most likely be the future. Heck, I know a lot of people who were looking at cars and decided to downgrade either to a base model or whatever is sold below it.

        Oh and as for gas prices, I paid $4.19 a couple days ago. Shockingly, the same station was selling E85 for $3.02! Off topic but thought I would share that.
      • 6 Years Ago
      "Those who cannot afford to buy" should not be leasing a new vehicle either. If your economy is tight, buy a cheap car.
        • 6 Years Ago
        Exactly.

        If you can't qualify for a loan....you shouldn't be buying the car in the first place.

        This is the problem with today's society. Everyone wants the best of this and that and they use credit to buy it. Bad idea.

        If you can't afford to pay for something in cash (other than a house or car) you should not be buying it.

        40 years ago housing costs were only 1/4 of a person's pay. Today...it's over 1/3rd.

        Car prices have increased from an average of 20k 10 years ago to over 30k today. The only way this is possible is by creating 5, 6 or even 7 year payment plans. I'll bet very few people could actually afford to buy a 30k car on a 3 or 4 year payment plan.

        We've become a nation of consumers with huge credit card bills....not good!
        • 6 Years Ago
        what a pompous comment.

        I'm glad you've decided to elect yourself both judge and jury for what folks should be doing.

        you're obviously an expert on leasing; are you aware exactly how much someone could save by leasing instead of buying?

        let's look at a Mercedes-Benz C300, the cheapest Mercedes you can buy in the US. I'm using a price at invoice ($31,000) for a C300 with no options at all...stick shift and vinyl (MB Tex) seats.

        present lease rate: $399 per month. would you rather buy it? that payment (at 8.5%) for 72 months would be $550; by the way, that doesn't include tax, doc fee, or license, which in my state would add another $3,641 to the price, or a jump in the payment from $550 to about $612.00 per month.

        now, let's shift gears here, and go back to your original statement about how someone "should buy a cheap car".

        let's look at an average Joe with a FICO score of 590. he present car crapped out, and he needs to replace it. he selects a one year old used(2007) Chevrolet Impala with a price of $15,995. let's add tax, license, doc fee, and extended warranty to that car. again, using my state as an example. that brings the total to $20,105. he can put down $1,105, which brings the amount financed to $19,000.

        his credit isn't so great, but he is still financible.
        the lender hits him at 17.5% interest, and limits the contract to 48 months. that payment would be $553.17.

        if you're not familiar with the car business, this is a very typical scenario. perhaps you would feel (after all, you're making everyone's decision here, right?) a better choice would be a purchase from a "buy here-pay here" lot. after all, a "cheap car", right?

        let's look at a three-year-old Cavalier with 80,000 miles on it; of course, no warranty. the lot's price is $14,999. don't bother to try to haggle here; they're providing the financing. forget about monthly payments; you'll be paying every week!!

        it would break down like this: amount financed: $17,000 (same $1,100 down payment; again, tax, license, and doc have been added in) interest rate: 35% (quite normal for this type of operation) weekly (NOT monthly) payment: $165.62. by the way, that equals a monthly payment of $662.51!!!

        now Swede, which is the "cheap car"???

        the real issue here concerns the fact that the used car market has dropped dramatically in the past year, and no make is exempt from that. everyone is buried in any vehicle less than four years old.

        couple that with the complete meltdown of the subprime auto lending market (which encompasses over 30% of all loan paper written), and you have the problem we have today.

        this problem is hitting absolutely everyone, no matter how much they make, or what their FICO score is.

        AZMike
        • 6 Years Ago
        I agree with LMBVette. I would go one step further by spending less than you qualify for and spend what you can afford. Maybe the economy used to be very good because people were out there spending money they did not have and it is time to pay the piper. But of course, it is all the government's fault that we made bad decisions. More personal responsibility and less government will do nicely. Too bad that is a fantasy...just look around.
      • 6 Years Ago
      This is all hype...there is NO PROBLEM.

      How do I know?

      John McCain said yesterday that the economy is strong.

      He "knows" what he's talking about.

      ...and half of us Americans believe him and will vote for him just like we did for Bush because to us, eight years isn't enough.

      Stupid is as Stupid does.
      • 6 Years Ago
      It's not a good idea to borrow money to get a new car anyway. They rapidly depreciate, introduce too much financial risk, and allow and encourage people to buy more car than they can afford.

      And, I do save up and buy my cars with cash. It is amazing what you can save when you don't have car payments.
      • 6 Years Ago
      Well personal financial responsibility is great and all, but when the US Government is bailing out private enterprise with money created from nothing that WE have to pay back, with interest, in the form of taxes it's not the common mans fault for the shape we are in. Though we, as a nation, keep voting in corrupt and irresponsible politicians in office. I don't vote for parties, I vote for candidates. I suggest you do your research before you vote and not vote for either Obama or McCain. They will only make it worse.
      • 6 Years Ago
      The bottom line is that our economy is going to suck until people, banks, and the government can all get their credit in order.

      The artificially sustained economy is coming back to haunt everyone that wasn't smart enough to stay out of debt...including the gov't. The national debt needs to be our number one federal priority if we are going to turn things around...the candidates need to stop whining about national healthcare and start paying attention to balancing the debt, otherwise there will be no way to pay for anything else.
      • 6 Years Ago
      What would the economy, car prices,CEO COMPENSATION look like if there suddenly was no easy credit or loans went back to 48 months max? I think what cars should cost would be more closely inline with my salary. But then if everyone lived like I do-I'm allergic to debt-there wouldn't be much of an economy. Or would there? Maybe it would be a better.
      • 6 Years Ago
      CORRECTION: Chrysler's sales are down 24.4% for the year through August '08 compared to the same period in '07. Chrysler's sales are down 34.8% for the month of August '08 compared to the month of August '07.

      "Chrysler's sales have been down 34% this year through August" is incorrect.
        • 6 Years Ago
        the 24% for the year is correct.
      • 6 Years Ago
      If BAD CREDITyour credit rating is less than perfect, you may give up the dreams of acquiring a new or a used car because for the longest time, the car loans providers have used good credit score as a must condition for this.
      • 6 Years Ago
      Good. Maybe they'll all raise their prices even higher so nobody can afford a car. Simple solution: lower prices.
      • 6 Years Ago
      You can thank Alan Greenspan for most of the financial mess this country is in right now. With Lehman Brothers filing bankruptcy and other large financial institutions in bad shape, we are heading for another depression soon. When you have a private banking cartel (Federal Reserve) that has the power to create money out of thin air and charge the government interest on it, it is a recipe for disaster. The more money it creates to lend to Congress because Congress spends more than what they take in revenues, the more the dollar is worthless. Now our dollar is worth about .04 cents.

      The only way we can get out of this mess, is to abolish the unconstitutional Federal Reserve and go back to REAL constitutional money (gold and silver) just like the constitution states. We never were supposed to have paper money. But for now, we will all continue to be serfs to the bankers who control our lives.
        • 6 Years Ago
        Interesting you mention serfs, because back when the only currency was gold, silver or pigs, I don't think the serfs were that much better off.
        • 6 Years Ago
        Well, besides the swipe at Palin, pigs wouldn't work for our Jewish friends. I say we start trading in non GM wheat, and other grains. That's the only way to do things.

        (If you did not note the sarcasm, please do not respond. If you did note the sarcasm, please do not respond saying only that.)
        • 6 Years Ago
        Greenspan is NOT the (only) criminal here.

        This is a sum of greedy Investors and Consumers.


        • 6 Years Ago
        Yeah or we could start paying eachothers in pigs.
        • 6 Years Ago
        "Alan Greenspan?! WTF? haha, your Bush guy replacing Greenspan killed the economy."

        What the hell are you talking about? You think Bernanke is the one who caused the housing bubble? What is happening with the mortage meltdown today goes back to the early 90's my friend. Greenspan by many economists is the main blame for the meltdown.

        And Bush nor any president has any say or clout as to who gets elected to the board of directors of the Federal Reserve. It just has the appearance of it. The board of directors of the Federal Reserve System is chosen by the president from a list prepared BY THE BANKERS THEMSELVES.
        • 6 Years Ago
        "Might I suggest a course in the Theory of Money? The problem isn't with paper money, it's with the US government spending more than what it's taking in; and the American household is spending more than what it's taking in, as well."

        I've studied Money theory for quite a few years. Here is a good book to read
        "The Theory of Money and Credit"
        by Ludwig von Mises or you can read Kotlikoff, "Is the United States Bankrupt?" in the July/August edition of the Federal Reserve Bank of St. Louis Bulletin (available on the internet)

        Yes, with the US spending more than it takes in, how do you think Congress/Federal Gov't gets the money to continue? It prints it (or borrows from China, etc). So by printing and borrowing more money it decreases the dollar which makes prices go up, what we call inflation. That's why we have this thing called the National debt growing, and growing and growing.

        Check out the video, Fiat Empire here:
        http://video.google.com/videoplay?docid=5232639329002339531

        It will explain what I'm talking about as far as paper currency and why the Federal Reserve violates the Constitution.
        • 6 Years Ago
        Might I suggest a course in the Theory of Money? The problem isn't with paper money, it's with the US government spending more than what it's taking in; and the American household is spending more than what it's taking in, as well.
    • Load More Comments