• Oct 16th 2008 at 10:31AM
  • 11

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]

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    • 1 Second Ago
      • 6 Years Ago
      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.
        • 6 Years Ago
        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.
      • 6 Years Ago
      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!
      • 6 Years Ago
      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.
        • 6 Years Ago
        Why would they do that? Then then no one would buy a 2008, and the 2008 would still be sitting on the lots.
      • 6 Years Ago
      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.
      • 6 Years Ago
      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.
      • 6 Years Ago
      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.
        • 6 Years Ago
        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.

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