GM launches campaign to tell buyers they can still get loans
DETROIT -- With October auto sales expected to fall short of September's 15-year low, General Motors (GM) is launching a campaign this week to reach people who have stopped looking for cars out of fear that they can't get a loan.
Many banks and finance companies, including GM's own GMAC Financial Services, have tightened credit standards because they can't borrow money to lend, or they're reluctant to lend and risk defaults. "But that doesn't necessarily mean you can't get a car loan if you want to get a car loan," GM spokesman John McDonald said. "We just want consumers to know that you have options that you may not be aware of."
GM will promote its financing options with radio, newspaper and digital advertising from Friday through Nov. 3. The program, called "Financing that Fits," will publicize a 6-year-old computer database that lets dealers locate banks, credit unions and other lenders willing to make loans based on a particular buyer's credit information.
GMAC said Monday it would only make auto loans to people with credit scores of 700 or above. That, coupled with numerous news stories about people getting turned down for car loans, has kept customers away from showrooms, according to industry analysts.
Several analysts are projecting October U.S. sales to be lower than in September, when automakers sold fewer than 1 million vehicles for the first time in 15 years. Some dealers have reported losing 20% of their sales as buyers get turned down for loans after agreeing to purchase vehicles.
"I think the industry has been so paralyzed by the mistaken impression by the public that they can't get an auto loan that they have to go to pretty drastic measures to counter that," said Jack Nerad, executive market analyst for Kelley Blue Book.
GM, analysts say, has to fight the overall impression that there's no credit, plus tighter credit standards from GMAC. GM sold 51% of GMAC to Cerberus Capital Management in 2006 but still owns the rest.
"They can't really rely on GMAC any more," said Rebecca Lindland, an auto industry analyst with the consulting company Global Insight. "That's where the dealer has to be able to step up and get local financing, using their local contacts."
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