2/24/09 
The President told the country and the nation’s automakers what they needed to hear tonight: the unvarnished truth. No bailouts for failed policies, corporate padding and misdirection. The car buying public has been voting with their pocketbook for years, but Detroit wasn’t listening.
The impending reorganization of Chrysler and GM will undoubtedly “re-invent” the American icon of prosperity, technology and youthful exuberance. The new age of automobiles has been thrust upon us by a decade of oil addiction and zero interest loans. Welcome to cheerful restraint, eco-conservatism and consumer debt modification in every aspect of our lives.
Gone are the days of no money down. 700 FICO scores get ready to open your wallet for 10% down payment on your next car. Don’t be shocked, dismayed or rudely appalled when the finance manager tells you the interest rate is 6.99% for 72 (6 years) months. The banks are taking President Obama’s lead and calling for accountability and restraint.
If you are “upside-down” (you owe more than the car is worth) on a trade-in, expect to cover the majority of the negative equity in
cash down payment, many
banks are not advancing the difference (letting you roll the extra on top of the selling price) on the loan amount. This is another form of accountability and loan-to-value relationship.
The coming months will see more dealerships close, or consolidate, as our appetite for consumption falls into line with our ability to manage our debt and the dealership’s ability to buy new cars are hampered by credit lines now tightened where the car manufacturers once gave dealers carte blanche . “If dealers can’t borrow money to buy cars to fill their lots, “you’re out of business,” said Charles Oglesby, chief executive of Asbury Dealer Group, of Duluth, Ga., which operates 87 retail auto stores. “It backs up the whole process of selling cars.” Cheaper loans for dealers also mean cheaper deals for consumers, he said, adding he gets financing from a consortium of lenders and isn’t concerned about his own dealers’ ability to borrow.” (as reported in the Wall Street Journal.)
This is healthy
“re-invention”, just as a “market correction” puts everything back into perspective. The automobile will survive, and the industry as a whole will emerge smarter, faster and economically wiser.
Fasten your seat belts and grab your shifter, the mandate has been set, our roadmap is clear and the car of our future is ready to
GO!
Read more about the American Recovery and Reinvestment Act for NEW Car buyers, click Here.
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Sarah Lee is an automotive executive with 20+ years of experience. She writers about Cars, and is a staunch consumer advocate on car related subjects. Her company: MY CARLADY is a car buyer’s service committed to getting you the best deal on your next new or pre-owned vehicle. You can reach her at www.mycarlady.com]]>
