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Car Buying Review

By Jeff Bressler

Word is starting to spread from various sources in the automotive industry from advertising and marketing executives, to competitors to dealers and consumer loyalists that GM might have blown its only chance for some semblance of reasonable survival.

We all knew that General Motors would never recover as the major player it once was. That was a given. We can see that the current battle between Toyota and Volkswagen will determine who will emerge as the top selling brand. Additionally, Ford is creating a dynamic future for itself. This is the current automotive climate. With Subaru, Kia and the like growing, GM’s future looks further tarnished. It is hard to believe that GM, under today’s conditions, will find any kind of acceptable niche to settle into among its competitors. It is a floating canoe with no paddle.

GM, after its major cash infusion via a public bailout, had a chance to clean house from the top down with the opportunity to start with a fresh slate and hire visionaries in the design, engineering, sales and marketing area’s of the company. Instead, most key positions at GM are still held by highly-paid company management lifers. Moving current employees, who failed at their positions and helped create this debacle, to other key roles will only spell more disaster.

I have the utmost respect for Bob Lutz, one of the automotive industry’s true greats. He has done some good in the marketing efforts he is currently spearheading, but his knowledge of how and who to reach out to in the new world of social media and electronics is greatly lacking and suppressing GM’s ability to distinguish its brand and sell new cars.

Instead of segmenting advertising to pinpoint target consumers, GM continues to act like it is 1960 by putting most of its resources into television. Hundreds of millions of dollars of taxpayer funds has gone to support adverting in the past 6 months and has fallen totally flat and produced no discernible gains in cars sold. GM lagged behind the competitions in Clunker August and continue to languish in poor sales numbers.

Other than the Chevrolet Volt and possibly the Cruze, the company has little in the pipeline that will stimulate any future excitement. This mess will take years to “mop up” under its current leadership. Cash infusions and time are just about up. Without the right key players in place to formulate an aggressive product rich future, GM will fail, and fail big time, taking all of us hard working taxpayers down with the ship.

To look at today’s news, let us go back just about a year to the day and revisit a dilemma that faced General Motors.

While automakers like Toyota were offering 0% financing, GMAC was limiting some long-term loans and had virtually ceased leasing. To add insult to injury, GMAC was forced to go one step further by requiring applicants to have a credit score of at least 700 in order to get approved for a loan. GMAC blamed a lack of stability in the global capital and credit markets as the reason for that disastrous policy.

As a result of that edict, GM was left without a single source for subprime financing for its customers. This lack of resources most certainly took a major chunk out of the company's market share over the past 12 months.

It appears that this nagging credit issue for GM customers might now be finally resolved. AmeriCredit has inked a deal with General Motors to provide financing to the company’s subprime customers.

Although, and surprisingly enough, not ballyhooed, this new program took effect last month.

AmeriCredit will offer financing on new 2009 and 2010 GM vehicles. This should help dealers sell off excess inventory and give a boost to the 2010 model sales season.

Not all dealers will necessarily participate in this program, so I would check with your local car dealership first. Your local dealer has to have a written agreement with AmeriCredit to help assist you in getting one of these loans.

The General Motors program is based on an existing agreement that AmeriCredit has with Kia. Buyers of the Korean-made cars can finance with average credit scores in the 500-600 range.

If you wonder why AmeriCredit is willing to give you a break if you have a low credit score, just take a look at the company's bottom line. The company showed a profit of $26 million in its just completed first fiscal 2010 quarter.

AmeriCredit is one of the few public companies that specifically target the subprime automobile loan market. Obviously that profit is derived from charging higher interest rates for the greater credit and default risks involved.

There is obviously no free lunch, but a new GM vehicle might await if you have been having credit difficulties.