General Motors to advertise to assure car buyers on loan options
16 Oct 2008
With former financing arm GMAC tightening its credit criteria and the consequent reduction in loan sanctions from the financing company imminent, General Motors Corp. (GM) has decided to take the bull by the horns and roll out an advertising campaign that will aim at reassuring buyers that they still have options from other banks.
The idea to get potential customers to approach other lenders comes four days after GMAC announced it would lend to buyers with top credit scores of 700 or more. GM spokesman John McDonald said that the campaign, termed ``Financing that Fits'', will also lay emphasis on existing rebates of as much as $6,000 on some 2008 models. Explaining the ad campaign, McDonald said that the fact that credit has been hard to come by ''does not mean consumers can't get a loan.''
Spending their ad budget to highlight financing options is indicative of what GM CEO Rick Wagoner termed as ``incredibly unusual times''.
GM's campaign will run till 3 November across television, radio and on the Internet. Spokesman McDonald said that customers will have the option of applying for loans using a Web-based system, and will be able to choose from many participating lenders. North American sales and marketing chief Mark LaNeve recorded radio commercials for the campaign.
Under the program, dealers can access hundreds of lenders via a Web-based system called "Route One", where they will be able to submit a credit application once and it would be reviewed by lenders including GMAC to arrive at the best financing option.
GMAC accounted for 43 per cent of loans for GM in the second quarter. However, last month GMAC loans made up only 20 per cent of GM's loans. The advertising campaign, and its incentive program to dealers that offers cash rebates for vehicle sales financed by lenders other than GMAC, might just reduce GM's dependence on its erstwhile finance arm.
GMAC's revised lending rules that call for credit scores of at least 700 preclude around 42 per cent of US consumers.
GM's vehicle sales have dropped 18.1 per cent this year. With revenues plummeting, the auto maker is taking some drastic measures to manage its costs and raise cash. The economic situation has seen US auto sales for September drop to their lowest in 15 years, on the back of weak consumer confidence in the face of job losses, a negative economic outlook and high gas prices which touched $4 a gallon before coming back to more affordable levels. GM's stock has dropped 75 per cent at the New York Stock Exchange (NYSE) composite trading this year. It has the steepest fall amongst the 30 companies in the Dow Jones Industrial Average.
Auto industry forecasters are now predicting October's sales to fall below 12 million cars and trucks, marking the lowest level since the early 1980s.
