GM launches new campaign to ease credit worries
After announcing earlier this week that GMAC would only finance customers who hold credit scores higher than 700, General Motors has decided it would be prudent to reassure consumers that they are still in the business of securing loans and selling vehicles. Starting Friday, GM will launch a "Financing That Fits" campaign on a national level. Through advertising on television, newspaper, radio, and the Internet, GM will promote dealer financing with GMAC Financial Services and, for the first time, with other lenders. To further restore consumer confidence, the ads are also designed to promote the experience and expertise of the dealership professionals who work in finance and insurance. The economy has taken a serious toll on GM's showroom traffic over the past few weeks, and the announcement Monday of stricter lending policies dried up business even further. The automaker is hopeful that its new ad campaign, and cash-back deals of up to $6,000 on every 2008 vehicle left in stock, will bring them back in.
[Source: Automotive News, subs. req'd]
Reader Comments (Page 1 of 1)
Gabagool 10:41AM (10/16/2008)
Why do people talk about GM when it come to GMAC.
GMAC is 51% owned by Cerberus, Cerberus also owns Chrysler, so it makes sense for them to do everything to hurt GM. And why not, they are holding their direct competitor by the "balls".
I also was thinking, is it possible at all that the reason GMAC said that only people who have a 700 score will get loans is really a move by Cerberus to put pressure on GM to buy out Chrysler.
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Gabagool 10:44AM (10/16/2008)
WOW, i was just listening to John McEroys daily video, and according to him VAST majority of people who buy GM vehicles have a below 700 score.
Fernando 10:43AM (10/16/2008)
I wish they'd extend these rebates to the 2009 model years. I've been eying the Cadillac CTS for a while now, but I want the 09 model, not the 08. I still have a year left on my lease, tho, so maybe by July of next year I'll be able to get me a nice 09 CTS for cheap.
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Nightcrawler 11:20AM (10/16/2008)
Why would they do that? Then then no one would buy a 2008, and the 2008 would still be sitting on the lots.
nataku83 10:51AM (10/16/2008)
It looks like the rebate on the 2008 9-7X is actually 8k...damn, that's gotta hurt
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MP 11:05AM (10/16/2008)
I work for a Cadillac store and there are hugh incentives on the CTS 09 in the midwest. There is up to $6,000.00 in incentives for people coming out of a lease. The deals are there....... You can get a 2009 CTS cheaping than people were getting the 2008 CTS last year!
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MajorGeek 11:07AM (10/16/2008)
So.. basically if you can afford a Cobalt, you can't have a Cadillac that is out of your price range. Now lets try that with mortgages, credit cards...
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Tim 11:33AM (10/16/2008)
Comment of the day.
Yes this is stupid. All the problems that we are in now are due to people buying things they couldn't afford. Now that everyone with crap credit is up to their neck in debt the auto companies realize that there is no one left to buy. Its too late to raise the lending standards. American car owners have less education, make less money and have lower credit than buyers of other makes. They are shutting out their core buyers.
BrianFL 4:26PM (10/16/2008)
@ tim
So what your basically saying is that all people who buy American cars are stupid, lazy, and trashy? Your Ignorance and character shows.
Tim 2:03AM (10/17/2008)
I never said any of those things. GM buyers are more blue collar. Nothing wrong with that. You fail to see the real problem. The problem is that the traditional ways at looking at the ability to pay a loan, namely credit score, income and education will not help GM sell any cars to those deemed "credit worthy". I am sure there are Cadillac buyers who make 100k+ but those buyers are few and far between these days. GM has to lower there lending standards to bring more new buyers in not raise them while foreign brands are lowering theirs
gslippy 11:13AM (10/16/2008)
"GMAC" ought to rename itself it is not associated with GM any longer.
Forget rebates, just lower prices and stick with them - like the Scion pricing model. People hate buying cars because of all the funny money flying around.
"Financing That Fits" makes a lot of sense, but it should have been the practice all along for every industry. And make sure we are "fitting" the financing based upon people's financial profile rather than their demographic profile.
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jamie 11:17AM (10/16/2008)
The next phase of the derivatives wipeout will hit insurance companies and auto makers. S&P is saying that GM and Ford may very well go bankrupt.
GM, Ford, France Telecom, DaimlerChrysler and Deutsche Telekom were the 5 companies most frequently included in credit derivatives contracts in 2004.
Indeed, according to Fitch there were billions of dollars in GM credit default swaps traded per day. GM CDS were the second most included named in synthetic collateralized debt obligations (CDOs) behind Ford.
On October 3rd, Bloomberg noted that GM saw its credit default swaps rise to record heights after the automaker said Sept. 19 it was going to draw down the remainder of a $4.5 billion revolving credit line to preserve cash because of the instability in the financial markets. GM has lost almost $70 billion since 2004.
As of June of this year the cost to insure GM's debt with credit default swaps rose to 33.5 percent upfront, plus annual payments of 500 basis points. Ford saw its credit default swap spread increased to 30.5 percent upfront, plus 500 basis points annually.
According to financial advisor Mike "Mish" Shedlock, there are approximately one trillion dollars of credit default swaps for GM.
If GM goes bust, there would be huge credit default swap liability. While I have seen no estimates of the current amount of Ford CDS, it is probably also quite high, given that it was one of the most common CDS issued in 2004.
Is it any wonder that GMAC, Chrysler Financial, Cerberus , Ford and GM are running for cover? I think not.
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Tim 11:21AM (10/16/2008)
How about an ad campaign called you're paying for it anyways. Simply explain to the American people that if you don't buy American they'll need more and more of your tax dollars. Lets keep up the illusion that these companies are solvent.
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gslippy 3:37PM (10/16/2008)
Awesome idea. Nothing like a dose of reality for this circus we're living in. Just let people know that our new appetite for socialism is exactly what this means.
tekd 12:02PM (10/16/2008)
Might not actually be a bad idea for all automakers to increase their selectivity with loans-would stop a lot of people from burying themselves with completely retarded loans.
700 might be a tad bit too selective though, but something like 670 isn't unreasonable to ask for.
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Fernando 3:18PM (10/16/2008)
SPAMMER!!!!
TROLL!!!!!
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