Bailout: Gm Offers 0 Percent Loans, Cash Incentives

fbachman · December 30, 2008

Automotive News

December 30, 2008 - 9:00 am ET

UPDATED: 12/30/08 12:47 p.m. EST

DETROIT -- Just hours after GMAC LLC accepted a $6 billion government bailout package designed to enable more consumer car loans, General Motors announced new incentives.

GM said today it is offering 0 percent financing through Monday, Jan. 5, on the discontinued Chevrolet TrailBlazer, GMC Envoy and Saab 9-7X SUVs and on two Saab sedans, the 9-3 and 9-5.

GM also is offering new cash incentives with other vehicles. Both 2008 and 2009 models are covered under the incentive program, which also runs through Monday.

GM might expand the incentives starting Tuesday, Jan. 6, Mark LaNeve, GM's North American vice president of sales, service and marketing, told reporters during a conference call today.

LaNeve said this year's credit crunch and other financial problems -- which saw GMAC exit auto leasing and only offer loans to consumers with credit scores of 700 or higher -- hurt dealers' ability to close sales.

"We've been trying to hold onto market share with one arm tied behind our back," LaNeve told reporters. He said dealers now can offer loans through GMAC to consumers with credit scores in the 620 range.

"Six hundred twenty is not a subprime score," said LaNeve. "That's a very creditworthy buyer. Hopefully, we'll have access to more of the market that is out there."

LaNeve said GM dealers are happy to have GMAC writing more car loans.

"Any tool they can get to make credit available and put deals together is a good thing," he said. "Anytime you can make credit available to a wider spread of buyers, that's a good thing.

"Not everyone has perfect credit. It brings a lot more customers into play for us."

One of those dealers, Ken Playter, said the 0 percent interest rate on three Saab models is an attempt to help dealers who are waiting for GM to sell the brand. But the 0 percent deal is only "a shot in the arm," he said, because it expires Monday.

"For viability for us, this isn't the answer," said Playter, owner of Glassman Auto Group in suburban Detroit. "We've got two new products, and both of them have been shelved" -- the new 9-5 sedan for six months and the 9-4X crossover for a year.

"We need product, and we need a clear decision made" on Saab's future, he said. "We're going to continue to be a part of General Motors' family, or we have a buyer lined up, and here's the buyer."

Because the 0 percent financing waives the cash rebates available for the vehicles, the interest rate doesn't really provide a better deal for most Saab customers, Playter said.

Another Saab dealer, Tom Sheehan, agreed.

"It certainly won't appeal to them as much as if the prime rate was 6 or 7 percent, but we're trying to move a market that's a little dormant," said Sheehan, who owns Sheehan Saab in Lighthouse Point, Fla., and is on GM's National Dealer Council.

Sheehan said he expects traffic at his store to increase 25 to 50 percent because of the GMAC financing news. But his December sales still may not reach last year's levels. Sales have fallen 20 to 30 percent from December 2007, although they are up from the loss of at least 50 percent Sheehan saw in November.

Besides 0 percent loans on some vehicles, GM is offering cash ranging from $500 to $4,250 on some vehicles.

The speed of the decision to offer a 621 credit-score minimum and APR deals surprised dealers, said GMC and Buick dealer John Rogin.

"The machine's working. The sales people are walking on air right now. They are on the phone, calling customers," said Rogin, who owns two stores in suburban Detroit. "There's incredible pent-up demand, where a lot of people have sat on the sidelines."

Even though the 0 percent APR only applies to five vehicles, the deal will bring out customers interested in different models, Rogin said.

"Any time a manufacturer offers 0 percent on any line, it piques interest," he said. This says, 'It's OK. Come on in now.' "

GM plans to spread the word about the 0 percent loans and cash incentives by modifying its Red Tag sales promotion and using heavy Internet advertising, said GM spokesman John McDonald.

Some of GMs top-selling vehicles, including the 2009 Chevrolet Malibu sedan and Silverado pickup, are covered under the cut-rate financing plan. Both are available for 4.9 percent for 60 months.

LaNeve said GM is performing better than other manufacturers this month, but he said sales will be down for the month compared with December 2007.

Chrissie Thompson contributed to this story

PRESS RELEASE: GMAC to Expand Retail Auto Financing; Customers to benefit from greater access to low cost funding

DETROIT, Dec. 30 /PRNewswire/ -- GMAC Financial Services will immediately resume auto financing for a broader spectrum of U.S. customers as a result of expanded access to funding as a bank holding company. The company will modify its credit criteria to include retail financing for customers with a credit bureau score of 621 or above, a significant expansion of credit compared to the 700 minimum score put in place two months ago.

GMAC's application to become a bank holding company was approved by the Federal Reserve Board of Governors on Dec. 24, 2008. The company also announced that it received an investment from the U.S. Treasury Department as part of the Troubled Assets Relief Program.

"The actions of the federal government to support GMAC are having an immediate and meaningful effect on our ability to provide credit to automotive customers," said GMAC President Bill Muir. "We will continue to employ responsible credit standards, but will be able to relax the constraints we put in place a few months ago due to the credit crisis. We will immediately put our renewed access to capital to use to facilitate the purchase of cars and trucks in the U.S."

At this time, GMAC will not finance higher risk transactions characterized by a credit bureau score of 620 or below. The company will utilize both GMAC Bank and funding from other sources to resume its traditional spectrum of prime-based credit, appropriately pricing for risk and requiring down payments where necessary.

"The majority of GMAC's auto financing has been in the prime arena," Muir said. "Therefore, opening access to credit for those with CB scores of 621 or better will allow us to return to more normal levels of financing volume, and should help in efforts to stabilize the U.S. auto industry."

GMAC's expanded financing policy and improved retail financing rates will apply to both new and certified used vehicles. Dealer wholesale financing remains a priority for GMAC, and is unchanged.

About GMAC Financial Services

GMAC Financial Services is a global finance company operating in and servicing North America, South America, Europe and Asia-Pacific. GMAC specializes in automotive finance, real estate finance, insurance, commercial finance and online banking. As of Dec. 31, 2007, the organization had $248 billion in assets and serviced 15 million customers.

BuckFeverZ · December 30, 2008

Dang, I didn't know the TB and Envoy were getting discontinued. I must be out of the loop.

The deals don't sound good enough to make me wanna trade in

Bowtie2Sierra · December 30, 2008

I have had been eyeing an '09 SD the last couple weeks. Just for the hell of it, I checked GMC's website and I'm not impressed with the financing or incentives for the Sierra's. They are advertising 3.9% for 60 months + $2500 cash rebates off the red tag price (the way I understand it). Not really anything to get excited about IMO.

Z45 · December 30, 2008

If they offer 0% or employee pricing I am getting a new 2009 Cadillac CTS AWD with Direct Injection 3.6L V6. My dealer says I can have the CTS for dealer invoice. I bought 2 GM vehicle with 0%, my 2002 Firebird TA WS6 was built on 9-11-01 and by the time it arrived they were offering 0% and when I traded it for the CTS in 2005 it was 0% on that car also. The GMC I did not finance.

VMax2007 · December 30, 2008

If they offer 0% and employee pricing I am getting a new 2009 Cadillac CTS-V.

Fixed. You missed a letter.

fbachman · December 30, 2008

If they offer 0% and employee pricing I am getting a new 2009 Cadillac CTS-V.

Fixed. You missed a letter.

exactly.....

MS3DALE · December 30, 2008

If they offer 0% and employee pricing I am getting a new 2009 Cadillac CTS-V.

Fixed. You missed a letter.

exactly.....

Sorry....But CTS-V has no incentives....No 0% financing,or cash back.

Z45 · December 30, 2008

CTS-V only comes with a 6sp manual. The V is another $10g and I don't want any more manual trans cars.

I drove a used 2006 CTS-V once when my car was in for service. Salesman gave it to me to go to lunch, really hauled a$$ but I went thru that phase with the WS6 and every rice burner was always wanting to race me, got tiresome being followed around and dared to a race. Worse then back in 1970 with my LS5 Chevelle SS454.

MS3DALE · December 30, 2008

CTS-V only comes with a 6sp manual. The V is another $10g and I don't want any more manual trans cars.

Nope,You can get a 6-spd. automatic for '09 (Its a 6L90-E)

Z45 · December 30, 2008

I can't find any V in stock within 500 miles of me.

A V with all the options is msrp $64,700

I had to give up searching, getting server errors when searching dealer inventory.

MS3DALE · December 30, 2008

I can't find any V in stock within 500 miles of me.

A V with all the options is total msrp $64,700

Ah C'mon.....You only live once

Z45 · December 30, 2008

This one I can get for 45,803

Exterior: Blue Diamond Tricoat Exterior

Interior: Light Titanium/ebony Leather

Drive Wheels: AWD

Engine: 3.6L 6 cyl Fuel Injection

Transmission: Automatic

MSRP: $51,675*

VIN: 1G6DH577490152xxx

CITY MPG 17 HWY MPG 25 *

MANUFACTURER'S SUGGESTED RETAIL PRICE $51,675.00

STANDARD VEHICLE PRICE $39,465.00

Options installed by Manufacturer

PREMIUM COLLECTION:

AM/FM STEREO, CD/DVD PLAYER,

BOSE 5.1 CABIN SURROUND SOUND

10 SPEAKER SYSTEM, 40 GB

HARD DRIVE DEVICE, DVD

NAVIGATION SYSTEM WITH XM NAV

TRAFFIC - SERVICE FEE EXTRA.

1ST 3 MONTHS INCL.

(REPLACES STD/OPT RADIO)

ULTRAVIEW SUNROOF

SAPELE WOOD TRIM ON CENTER

CONSOLE, INSTRUMENT PANEL AND

DOOR TRIM

SAPELE WOOD TRIM ON STEERING

WHEEL AND SHIFT KNOB

* LUXURY LEVEL ONE PACKAGE:

*THEFT DETERRENT ALARM SYSTEM

*RAINSENSE WINDSHIELD WIPERS

*INTERIOR AMBIENT LIGHTING

* LUXURY LEVEL TWO PACKAGE:

*HEATED AND COOLED SEATS,

DRIVER AND FRONT PASSENGER

*SEATS, REAR SPLIT FOLDING

*POWER TILT/TELESCOPE

STEERING WHEEL

*KEYLESS ACCESS

*REAR PARK ASSIST

* SEATING PACKAGE:

*SEATS, LEATHER SURFACES WITH

CHEVRON EMBLEM

*PWR SEAT ADJUST-FRONT

PASSENGER & PWR LUMBAR-FRONT

PASSENGER/DRIVER, 10 WAY

*MEMORY SEAT ADJUSTER

*BLUETOOTH FOR PHONE

*CONVENIENCE NET, CARGO

*UNIVERSAL HOME REMOTE

*HEATED WIPER FLUID IS NOT

INCLUDED

18"ALL SEASON TIRE PERFORMANCE

PACKAGE:

*HEADLAMPS, HIGH INTENSITY

DISCHARGE W/ADAPTIVE FORWARD

LIGHTING

*HEADLAMP WASHER

*18" PAINTED ALUMINUM WHEELS

*ALL SEASON TIRES

*DIFFERENTIAL, LIMITED SLIP

*SPORT SUSPENSION SYSTEM

*FOG LAMPS

18" POLISHED ALUMINUM WHEELS

(REPLACES STD/OPT WHEELS)

CTS STANDARD PACKAGE

BLUE DIAMOND PREMIUM PAINT

TOTAL OPTIONS $11,435.00

TOTAL VEHICLE & OPTIONS $50,900.00

DESTINATION CHARGE $775.00

TOTAL VEHICLE PRICE*** $51,675.0

MS3DALE · December 31, 2008

That Blue Diamond Tricoat sounds nice,I haven't seen that color yet....We have a Red Jewel Tintcoat one,also an AWD with the premium package and polished wheels,sitting in the showroom now,Boy is it sweet. I think the MSRP on it is the same at $51.6